Advice regarding builders suggestion

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kushrova

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Hi. I am in need of some advice. I'm buying a house in a very small development of four houses. They are almost complete at this stage. The builders ran into some problems between one thing and another and everything was put on hold. As it stands the builder has sorted out these problems and i can now proceed to buy. I have renegotiated the price. The builder agreed to the lower price on the basis that the price on the contract is €25k lower than the agreed price and that I pay him the €25k difference direct(on the day that I get the keys). Hes not being pushy or anything but I dont know what the implications might be. He also does not have the money to finish the work on the house and has asked if I can pay for this and this amount will be taken off the price that will be on the contracts. What do you think
 
Potentially major fiddle - beware IMHO. Any arrangement regarding finances etc goes in the contracts and suggestions payments / backhanders outside of contracts should be dismissed out of hand.
 
Heard of someone who got involved with a builder in this type of situation many years ago and couldn't get out of it when the builder came back twice looking for further payments outside the contract. Run away .......................
 
Run away very fast and thank your lucky stars you stopped to think before you signed anything. There are plenty of houses out there. Don't be in any rush.
 
Leg it -- you bought a house - not a half built ruin. If he hasn't got the money that is his problem not yours.
 
Thanks for that. I know i'll probably come across as a bit dim but im still in two minds what to do. I appreciate the point that theres loads of houses out there but this one is a one off(all 4 houses in the development are different) and I love it. I'm getting it at a good price aswell. While all the delays were happening I trawled through the property websites and there is nothing that even comes close to this property. As I said its 99% finished so it wouldnt take much to finish it off. Am I just being stupid
 
kushrova said:
Thanks for that. I know i'll probably come across as a bit dim but im still in two minds what to do. I appreciate the point that theres loads of houses out there but this one is a one off(all 4 houses in the development are different) and I love it. I'm getting it at a good price aswell. While all the delays were happening I trawled through the property websites and there is nothing that even comes close to this property. As I said its 99% finished so it wouldnt take much to finish it off. Am I just being stupid
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You're not stupid. You're just trying to do the best thing for your future. Stupid would be rushing in without thinking about it.

Buying a house becomes a very emotional thing and sometimes our emotions blind us to the practicalities. Forget for a minute how much you love the place, forget that it's unique and look at the hard facts. Does it seem like a good price, even compared to others out there?

Presumably, the builder is trying to find a way of not declaring 25k for tax purposes. But his money worries are his problem, not yours. I definitely wouldn't get involved in a part-cash transaction for a purchase this size.Talk to your solicitor - I'm sure he'll advice you against it too.
 
thanks. if we were to do this i'm assuming that the whole thing would be illegal from the sounds of things
 
And whatever proposal you offer, he is not going to tell you to run. A good buyer is hard to find. Make up a deal to benefit you not the builder.
 
Would paying the builder a certain amount in cash not be similar(in the legal sense) to what a lot of people did a few years ago in order to avoid paying stamp duty(by paying the balance above the s\duty limit directly to the vendor and fob it off as payment for contents). I know of a number of people who did this and there was never any distain towards it
 
Has the house been inspected yet by a competent architect/ building surveyor?

What certs and/or Opinions of Compliance are being offered?

Make sure the paperwork is complete before buying.

And variations in relation to payments should be minuted, signed off by both parties and a formal record made of payments and receipts issued.

Do not get sucked into something you will later regret.

:)

ONQ.
 
While I do not support any form of tax evasion, I would be a little less hasty to cast the first stone at this builder without knowing more.

In the current climate, when a new house sale closes, the bank who hold a mortgage will want all of the nett sale proceeds. They will want to apply this against their loan. They will not be willing to release any of this money to their customer to fund his continued work, to reduce the overdraft he has run up in finishing the house or indeed to fund his VAT liability arising on the sale.

Even good, asset-rich builders are in a situation where they are finding it difficult to get money to finish houses so that they can complete already-contracted sales. Acting for house builders now means negotiating with the bank throughout the construction period and beyond.

It may be that this builder is trying to circumvent unreasonable limits imposed by his bank. It may even be that the €25k he is looking for 'under the table' is in fact required so that he can discharge the VAT on his sale, and will be declared to Revenue (but not to the bank). He would be better off getting his solicitor to negotiate proper terms with the bank ( as my clients do..........) but perhaps he does not have a solicitor or accountant prepared to go to bat for him. Perhaps he is one of those builders who have left themselves without good advice because they have not prioritised their relationships with their professional advisers.

Of course, the most likely explanation is that the builder is going to fiddle his taxes. But these are strange times - so as stated, I would not leap to judgment.
 
Has the 25K been asked for in cash or can you pay it with a cheque or bank draft, if cash... run, if cheque or bank draft... he is not avoiding tax just trying to keep his business up and running as others have pointed out.
 
Chances are that if his financial difficulties continue, you'll be able to get the house eventually with a discount of a lot more than 25k.
 
The money has been asked for by cheque or bank draft. I know the bank are no longer bankrolling him and the houses as they stand cannot be finished. from the replies above Im veering towards pulling out, eventhough I really want this place. Id feel nervous getting involved with something that may have repurcussions in the future
 
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