Buy out of contract

O

Orchardman

Guest
Hi all,
some advice needed. We signed contracts on a new property purchase about 18months ago, paid the deposit and waited. Circumstances changed in the meantime and we find ourselves not able complete the deal. We talked to the developer and they are willing to let us out of the contract for an additional 10k. We have a property already as a family home. Is bankruptcy the option.

O
 
Does that he mean he expects to retain the deposit plus 10k? What was the deposit - 10%?
 
Unless the property is built. I think you might be getting a poor deal there. I know of people who wanted to get out of their contracts and leave the deposit with the developer 12 months ago, mainly as it was talking so longer for the developer to start building. But the contractor refused asking for a penalty. So it was left as is.

Now it appears that the next phase of the scheme will not be built, as the developer can't sell enough properties to justify it. So hes offered everyone out of their contracts if he keeps their deposits. Of course now people realise that if the developer is not going to build, he should return all of their deposit. So they are going to hold out some longer.

Your situation may be different, if the properties are already under construction etc.
 
Orchardman said:
sorry deposit (10K) plus another 10K
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Consult your solicitor about the contract you signed. As for the developer's extra 10k, tell him to go whistle as I believe the only loss you should suffer (worst case) is your deposit.
 
I would have thought that the worst case is that they try to force you to close or try to sell the property cheaply and recoup and difference from you.

Will the developer find it easy to sell this property? Will they get the same price that you contracted to buy it for? If you find an alternative purchaser, will the developer let you sell on the contract at a profit/ loss?
 
Orchardman said:
... Is bankruptcy the option.

O
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Bankrupcy isn't really an option in Ireland. The terms are really strict and punative AFAIK.

mathepac said:
Consult your solicitor about the contract you signed. As for the developer's extra 10k, tell him to go whistle as I believe the only loss you should suffer (worst case) is your deposit.
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Not true. The second bit of advice is incorrect. The developer is entitled to force you to complete the contract. Obviously he feels that you may pay the extra €10k to get out of this obligation.

But the first bit is correct. Best to talk to a solicitor and see if there is any legal way of getting out of the contract (e.g. build taking longer than specified in the contract). Though to be honest I wouldn't fancy your chances as the contracts are always written to be in the builder/developer's favour.
 
Thanks for the input.
Property is pretty much complete now. We did talk to Solicitor but was told basically there was nothing they could do for us. We are feeling short on options and could not afford to take on the property even at lower price. Developer has other properties that they haven't got buyers for.
Need some good advice

O
 
If the property is almost complete, then I don't think you've too many options. Indeed, 20k might be a cheap way out of it.
 
MrKeane said:
You speculated on the property boom, you have lost €20K, pay the €10K to get out and move on.
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Yes, the builder is probably being quite generous.
 
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could be worse - I lost 30k on equity markets this year, on top of 20k lower on an investment property sale and another 30-40k lower on PPR sale - so I agree with Mr Keane - specualtion on property - hasn't worked the way you wanted - cut the 20k loss and move on - stress wise its the best to do. Clean break - pay it off and move on. It'll be worse if the builder forces completion of the sale and you are stuck trying to sell the thing! 20k seems cheap to get out of that situation (just tell the missus you won't be bringing her anywhere nice for a while :D .. joke before the ladies on the boards jump down my neck ...)
 
I'd pay the 10k and go, I'm in a similar position but the builder is hanging in to get as much as possible from us. 20k seems like nothing!
 
Unfortunately losing 20k may be the best deal you can do at the moment, and the builder may only be offering it because he needs quick cash.

Under the standard contracts, the builder is entitled to keep the deposit you have already paid, sell the property to a third party, and sue you for any difference between your contract price and the new sale price plus the costs of the re-sale. I don't know the sale price of the property, but it could cost you a lot more if you don't negotiate a deal.

I would go back through your solicitor. Ask your solr to apologise on your behalf to the builder. Tell him you just cannot get the money from the bank, and you don't have an extra 10k to pay him. See if you can negotiate him down to a smaller sum. He does not want the cost of sueing you either.

Good luck.
 
What will be description for this (10k€) payment?
My advice is sack your solicitor and find solicitor with bright head.
 
RckScientist said:
What will be description for this (10k€) payment?
My advice is sack your solicitor and find solicitor with bright head.
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That is an entirely silly suggestion.

And what exactly is the solicitor with the bright head going to do?

OP is legally bound into a legally binding contract. He can buy his way out of it and walk away or he can be sued to complete.

mf
 
Yeah may be you are right, "simplest" option is to pay.
 
As you have another property which the developer could potentially register a judgment against the simplest thing may be to pay the €10,000 and move on. If you allow his to sue you you will spend years in High Court litigation with the possibility that you will lose and end up in a far worse situation financially.
 
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