Can I get my deposit back?

D

dublinario

Guest
Hi, I was wondering if anybody knows whether a deposit on a house is redeemable, in the event of a shameless U-Turn? I put €35,000 down on an unbuilt 2 bedroom apartment in Citywest, I think, last September/October-ish. I've come to regret my timing more and more as the housing market's become more and more shaky. I feelt a bit thick, frankly, as though I watched house prices rising and rising for years, saying "easy, easy, hold, hold", and then right when they peaked went "NOW!!!" That's more or less the reality.

The apartment is just about finished, and I'd say I'll be called to snag in the next couple of weeks. Dreading it a bit, because I've lost my enthusiasm. A friend casually mentioned to me this morning that - in his opinion - I could still bail out and get my deposit back; maybe not the €3,000 booking fee, but certainly the remainder of the €35,000. I had a quick look on myhome.ie, and it seems that I can possibly, even now only one year on, get more for my money. I'm thinking of pulling out and buying somewhere cheaper/bigger for the same money/less, or perhaps just holding out for another while to see how far prices fall.

I'll obviously ring my mortgage broker about all this, but I was wondering if anybody knew of the bat whether it is true about deposits being retrievable?

Thanks in advance,
Dub
 
Not your mortgage broker you should be talking to but your solicitor.

If you have exchanged contracts (i.e. both you and the vendor have signed) with the vendor you could stand to forfeit the full €35,000 if you pull out.
 
first step is to contact your solicitor as they will know what stage of sale/contract you are at and if it is possible for you to pull out. Once you clarify that then you can weight up the pros and cons for proceeding with the sale or not. good luck
 
It's not even a question of forfeiting your deposit.

If you have a signed contract the vendor can legally enforce completion of the contract and force you to buy.

Granted this has been unusual in the past with most vendors settling for the retention of the deposit but in the current climate if the value of the property has fallen by more than the deposit amount he will be at a loss and he has the right to force the sale through.

Sorry for not being more positive but I believe this to be the legal situation you are in.
 
My guess is that if the apartment is ready to snag in a couple of weeks then contracts have been exchanged - in all the new build houses I have purchased the builder exchanged contracts no later than 12 weeks after placing initial deposit.

I think HighFlier is spot on I'm afraid
 
Not at all HighFlier, I appreciate your candour, and thanks to the other lads for replying too. No point in sugar coating it if I am locked in to this purchase. I'm going to ring my solicitor shortly, so I'll know one way or the other.

I signed contracts when I paid my deposit last October. I presume there's more contracts to be signed, after I've snagged, and before the builders finally draw down the money from my mortgage lenders and give me the keys. I'm hoping that the former contract might be escapable, even if the latter isn't.
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efm said:
My guess is that if the apartment is ready to snag in a couple of weeks then contracts have been exchanged - in all the new build houses I have purchased the builder exchanged contracts no later than 12 weeks after placing initial deposit.

I think HighFlier is spot on I'm afraid
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Thanks efm. If I'm locked in, I'm locked in. It's then something I can't control, so I won't whinge about it. I do like the place I bought, so it won't be the end of the world.
 
dublinario said:
I signed contracts when I paid my deposit last October. I presume there's more contracts to be signed, after I've snagged, and before the builders finally draw down the money from my mortgage lenders and give me the keys. I'm hoping that the former contract might be escapable, even if the latter isn't.
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'Fraid not! It's all the same contract just different stages - you have Exchanged the Contract and have agreed to be bound by the terms of the contract.

The next stage once snagging is completed is called Closing the Contract where both parties agree that all conditions have been fulfilled, the contract can be closed and legal ownership of the property can pass from the builder to you.
 
Right you be efm! I just rang my solicitor, and I'm 100% locked in. If I pulled out I would lose my full €35,000. The only option open to me would be to potentiall "sub-sell", which is selling on a place before you move in or have the property put in your name. Even then, she said she's not sure sub-selling is allowed in my contract, and that she'll check it out for me.

I doubt sub-selling would be a viable route, even if I'm allowed do it. But we'll see.

Thanks for all the advice everybody.
 
The only thing I can think of is if the sale is dependent on final mortgage approval from the bank on valuation of the finished property.

If for some reason the bank valuation was below the price they may not be willing to give you the mortgage? And the deal could fall through

What if you had been made redundant would the bank still be willing to give you the mortgage? And if not could the developer still force through the sale.
 
Try not to look at it in the short term, there is a drop in price at the moment, but if you are planning on being there for another 5+ years you should see things steady up.
 
Camry said:
In a similar vein, but subtly different emphasis.

If you are planning this to be your home for a decent period of time, you have in fact lost nothing in a real sense - you are no worse off than you expected to be when you signed the contract.

You decided it was the place for you at the price on offer. Assuming the place is the one you signed up for the only thing you are faced with is regret that you can't see into the future. It could have easily gone the other way (and has done for a few years).
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Spot on.

If you were an investor, the situation would be completely different, but it sounds like you have bought to live in at least for the medium term.
Stop worrying, start planning your move and all the kitting out etc. a very exciting time, enjoy it.
 
I suppose the real danger here is negitive equity. Have the prices fallen in the area to such an extent that you could loose your whole deposit, buy a similar other property, and still be better off? Are you in it for the long or short term?
 
Camry said:
If you are planning this to be your home for a decent period of time, you have in fact lost nothing in a real sense - you are no worse off than you expected to be when you signed the contract.
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Now I'm not saying anything about house price etc but over paying for a house matters regardless of whether you can afford it or not.

If the house is available for €30k less in a years time then this person could be saving (of the course of the mortgage) €60k. To have €60k net your need to earn nearly €120k. There are alot of better things I can think of doing with €120k that giving it to some one else for a house!
 
Camry said:
This makes no sense to me (and I am a massive Irish property bear ;) ). All you are saying is that if the OP was a psychic who could predict the future, they could have bought a cheaper house.

If that is the case, the OP has lost a lot more; failing to predct last week's winning lottery numbers.
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That's not what I am saying at all.

I am saying overpaying for a house always matters regardless of whether you can afford the house.
If you overpay by €30k then over the course of the mortgage you have to earn nearly €120k to pay that €30k back.
 
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