Contract exchanged. Cooling off period over. Can owner still rescind the contract?

LGD86 on 20/11/2020 - 17:08

Hi

I and my partner have put an offer for a unit 2 weeks ago. We exchanged the contracts and paid 1% deposit (Owner asked for it and wasn't ready for the usual .25%). We have a 2 week cooling off period. Our finance approval took some extra time since my partner only has a single name (no surname) and the owner wanted to lease back the property for 1 month after the settlement. During this time our agent informed us that the owner has involved another agent behind our back to line up potential buyers in case our finance approval doesn't come along. The owner isn't happy with the sale price and would do anything to get better returns.

Fortunately we received our approval today and we have paid the rest of the deposit before the cooling off period ends. Since my partner only has a single name the settlement might be paper instead of PEXA settlement. We have agreed to pay extra to our solicitor for it but the owner wants us to pay on their behalf to their solicitor as well. This is still under discussion with the solicitors.

The question here is whether the owner can still rescind the contract on the issue of extra payment to solicitor for paper settlement. I think he doesn't have any legal standing but I am confused whether any outstanding points between solicitors can be a reason for contract cancellation.

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Comments

  • brendanm on 20/11/2020 - 17:14
    +8

    Seems like your solicitor would be the perfect one to answer this question.

    Is your partner Madonna?

    • resubaehtgnolhcs on 20/11/2020 - 17:23
      +2

      Or Ronaldo?

      • bdl on 20/11/2020 - 17:33
        +1

        Or Bono?

        • holdenmg on 20/11/2020 - 17:37
          +1

          or Cher?

        • kanad on 20/11/2020 - 18:42
          +1

          Have to answer this. I worked in a regulated industry, now left. There were specific industry/govt. rule to handle people with single name as automated reports go out to ATO. The rule was put a dummy surname named 'onlyname'. So it would be Madonna Onlyname when we sent our yearly report to ATO. This was hardcoded in the program. Funny that PEXA can't handle this.

          • Hardlyworkin on 21/11/2020 - 08:11

            @kanad: Having 1 name is pretty common in Indonesia. I've noticed that many people repeat their one name to get around this - when online forms require 2 names. Must be frustrating for them.

  • avoidfullprice on 20/11/2020 - 17:22

    Answer will be in the actual contract, if there is a subject to finance clause, agreed exchange value and if mode of settlement is stipulated.

    Face value is no, because you don't pay for their settlement fee, you pay the agreed amount. However, if the settlement doesn't happen you don't get the property. If you have done your part then next course of action will be court I suppose if they refused the sales over a few hundred dollars.

    Disclaimer: my opinion. not a lawyer

  • tsunamisurfer on 20/11/2020 - 17:30

    Buyer pays their settlement costs.

    Seller pays their settlement costs.

    Unless both parties agree to something outside of that, that is the default and not really grounds for nullifying the contract.

    Is the Seller really refusing to carry out the contract based on that?

    • crashloaded on 20/11/2020 - 22:10

      I think op is just afraid of them using it as an out.

  • spal on 20/11/2020 - 17:34
    +1

    If you are in VIC, you would find that the contract conditions talk about PEXA settlement. Now, if the bank wants to change to paper settlement, then that would mean change in the contract conditions. Usually, this would involve your conveyancer request for an amendment. It would be fair to offer any additional expenses incurred by the vendor as a result of the amendment. This shouldn't be much, in the order of few hundred $. However, vendor cannot rescind a contract merely on this condition. This is just a condition to lay out how the transaction will be carried out. Once a contract is complete, which it appears it is, it is incumbent on the parties to do everything possible to complete the agreement. They cannot frustrate on flimsy grounds. If they do, you can go to VCAT and as to be compensated. The compensation could be, if you are required to buy another property, any additional expenses you incur in buying that, or any additional sums the vendor received from the new buyer. It all depends on the nuances of the case and what VCAT decides. But, in any case, you are likely to have a decent case.
    I would suggest that you engage a good solicitor/conveyancer who is wiling to do their job. Although, they would most likely charge you for the additional services.

    Edit: I see you are in NSW. If I understand correctly, NSW is also doing most settlements on PEXA.

  • Keplaffintech on 20/11/2020 - 17:59
    +1

    You have a solicitor right? This is why you pay them $1000s. Firstly they should have made sure there was nothing stupid in the contract to allow this, and secondly they will deal with all of this for you.

  • GD86 on 20/11/2020 - 18:07
    +1

    Thanks everyone for your responses. The underlying issue here is that this transaction was essentially a stressed sale since the owner had bought another property in an auction. The contract with us was executed within 2-3 days. Since we bargained hard, the price for the property wasn't ideal for the owner. Hence as per our agent the owner's intentions were for this contract to fall through since other potential buyers were probably offering more. So the owner would try their best to not honor this contract.

    We understand that the solicitor expense is additional burden on the owner. Infact we agreed to bear the owner's expense but our solicitor is of the opinion that each party has to bear their expense. We are just a little worried that such a minor issue for a few hundred bucks should not stop the deal from being sealed.

    Glad to know that owner cannot rescind merely on this condition.

    • workhappens on 20/11/2020 - 20:12
      +2

      Buying a property is stressful. At the same time you should just listen to what your solicitor says instead of being soft and agreeing to whatever the vendor asks for. The vendor exchanged contracts with you with certain conditions in it, one of them being the price. If they regret it, they can suck eggs now unless you/your solicitor somehow had some weird clauses in there letting this happen.

    • RockyRaccoon on 21/11/2020 - 07:10
      +3

      You state that the owner has bought elsewhere, and was motivated to sell at a better price for you because of this.

      If so remember, that should they find someway to rescind the contract, for them it means delaying the sale and getting funds to complete their other purchase.

      As time moves on, this pressure also builds on them to settle.

  • djkelly69 on 20/11/2020 - 18:10
    +1

    Unless there are some really weird special conditions in your contract, the vendor doesn't have any grounds to rescind.

  • JIMB0 on 20/11/2020 - 18:27
    +4

    Did your solicitor lodge a buyers caveat on the property? This can give you extra protection to prevent them selling it to someone else.

    • hashtagbargain on 20/11/2020 - 20:17

      Yup this was the advice my conveyance had as well.

  • Seraphin7 on 20/11/2020 - 19:57
    +2

    If push comes to shove, sellers can basically get out of property contracts very easily in NSW. Basically they can simply refuse to settle, and unfortunately not much the buyer can do about it There's lots of articles out there on this topic, here's one. If it comes to this, you would then need to launch legal proceedings to sue for damages. You can't (at least simply) just "force" the seller to settle.

    You need to engage through your solicitor on this matter. Assuming they are well experienced in this field they will have seen various shenanigans from time-to-time and they will be your best guide through this.

    Stepping away from the legals for a moment, you need now to consider your commercial options. If you've got as a good a deal as you say you have and it literally turns on throwing $500 worth of "happy money" to the vendor, that's probably in your interest. It's unlikely this scenario is a simple as that, but while being guided by your solicitor, don't throw away a great deal out of pure stubbornness.

    • GD86 on 21/11/2020 - 07:18

      Yes, more than happy to throw the 'happy money'. We were just nervous since our solicitor hasn't agreed in writing with the vendor's solicitor that we are ready to bear the cost. That shouldn't become a reason for vendor to pull out of the contract.

  • dizzle on 20/11/2020 - 20:10
    +1

    You say the finance took longer than expected, did this fall outside of the contract agreed time. You are assuming the sellers thoughts, but it's more likely with the finance approval taking a while they thought they should line up other buyers. The agent is not working for you, so I'd take anything they say with a grain of salt. And if the agent didn't get a contract with exclusive sales, then more the fool them.

    I'm currently searching for houses and I am turning up to open houses only to find out that a contract has already been accepted. The real estates are going forward with inspections to maintain interest in case finance fails. I've even turned up to one that said if I put in a better offer and paid cash I could override their offer (they called it a sunshine clause I think)

    Talk to your conveyancer/solicitor (not the agent). If your contract has gone unconditional as you seem to suggest, then I don't think they can stop it. If your finance approval went past the deadline, then there may be grounds.

    • crashloaded on 20/11/2020 - 22:12

      Sunset clause

      • dizzle on 20/11/2020 - 23:03

        that would be it :)

    • spal on 21/11/2020 - 05:58

      I am guessing here, but if the finance approval has gone past the time, then the buyers solicitor would have already requested and received further extensions. The vendor would not have otherwise accepted balance of the deposit after finance approval. Contract would only go unconditional one all the pre-conditions to the contracts are met, which would include finance approval and payment of balance of the deposit.

      We bought a property just when Covid hit. We sign a contract, but needed to walk away from the first one due to building inspection detecting flammable cladding, which was not disclosed. We the bought another property. In both cases agent continued to hold inspections until such time the contract went unconditional. It is fair I guess to protect vendor's interest. Although, they can receive offers, but not deposits I was told.

    • GD86 on 21/11/2020 - 07:16

      Thanks for your response. My finance approval happened just a day before cooling off ends. We paid the balance deposit on the last day of cooling off period.

      I will speak to my solicitor on whether the contract is now 'unconditional' since we have fulfilled all the conditions

      • dizzle on 21/11/2020 - 10:10

        Cooling off period is different from a deadline set for finance approval or building inspection approval.

        Often you get 10-14 days from the signing of the contract to do your due diligence that you can afford it and that the seller isn't hiding anything bad about the construction.

        You will have to look at your contract to see how that applies to you, but if you are not aware of these, then it doesn't look good for any solicitor/conveyancer you have paid.

    • GD86 on 21/11/2020 - 07:19

      Thanks for your response. My finance approval happened just a day before cooling off ends. We paid the balance deposit on the last day of cooling off period.

      I will speak to my solicitor on whether the contract is now 'unconditional' since we have fulfilled all the conditions

  • OzHunterNSW on 21/11/2020 - 12:15

    Well, not without a fight. A contract is a contract.

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