Key Practice Areas
The Risk Of Buying Off-The-Plan
Monday, October 23, 2017
Case Reference: 154543
The Situation: Our client entered into an off-the-plan contract to purchase a block of land in August. The contract was subject to finance approval, which our client obtained in September. The development encountered massive delays and as a result the land was not registered until July the following year. With the land now registered the seller called for settlement. The issue was our client’s finance approval had expired by the time the land registration occurred. With a change of circumstance, financiers tightening lending requirements and an issue with land valuation our client was unable to get finance re-approved. Our client attempted to seek finance approval from four separate banks, yet each valuation came back under the contracted purchase price resulting in the non-approval of finance.
Following months of attempts and multiple extensions, our client gave up and was ready to default on the contract.
We advised our client that we should try to negotiate a way out as a last attempt, requesting the seller to consider agreeing to a mutual termination of the contract as full and final discharge of the matter, rather than dragging the matter further or litigating the matter. Our client agreed and we prepared a letter to the seller’s solicitors explaining the situation and seeking mutual termination of the contract. We cited the developer’s delays in obtaining registration did not assist our client’s situation.
The Result: We obtained a response from the seller’s solicitors after a month, accepting mutual termination of contract. Not only did the seller accepted mutual termination, the seller also agreed to refund the deposit to our client in full. The moral of the story is you never know unless you ask!
As every case is different, the cases reported here cannot be taken as an indication of a similar outcome being likely in your case, and these reports are not to be taken as legal advice about your particular situation.