Laragan customers lose their deposits

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Many many posts ago I asked why deposits were paid directly to builders and some of the solicitors at the time justified it. I can't find my post but some of the questions I would have for the legal profession are

1. What is the link between the people who run Homebond and builders.
2. Did solicitors point out to purchasers that their deposit was going directly to the builder and that if the builder went bust they could potentially lose their deposit?
3. Is the Law society looking at not allowing deposits to be paid to builders - I think MOB replied to this for me before
4. If there is a homebond guarantee for a deposit then it should not have a time limit, it's time limit should be equal to the handing over of the completed property or no signing of contract
5. Is the Law society looking at the fact that completion dates in contracts mean absolutely nothing, they are basically non binding on builders but the purchaser can be forced to complete
6. Is the Law society looking at changing the standard contract so that mortgage clauses can not be removed unless the purchaser has a guaranteed mortgage contract from a bank or they have the cash to complete or something like that.

There seems to be a particular problem in relation to off plan property in that the balance of power is with the builder to the detriment of the purchaser, an uneven legal relationship. To me then the legal profession needs to step in and make sure this doesn't happen in the future.

Perhaps you should repost under a seperate heading as this post is taking a life of its own.
 
Our contracts detailed that our deposits were being handed over to the builders.
I understood this when signing the contract.
I am sure my contract is identical to everybody else's contract.
 
If 20K is such a 'paltry' sum of money you should donate some to the builder to help him out. You have no idea peoples situations now or how they got the deposit money in the first place and to make such a comment is an insult.

If a property has dropped 40% from 500K to 300K, a drop of 200K, and the market is decling further then to lose 20K is nothing. Whether one has borrowed or saved the 20K it is a paltry sum relative to the devaluation plus the ability to repay has also probably decreased. The person who has lost the 20K can now save and purchase the equivelent house for 60%.

If you find my post insulting then can you tell me how you are financially worse off than before? I defy any single purchaser of Laragan to prove how they are financially worse off today than last week.
 
OK folks

Calm down.

I have had to warn people about defamation and ban foxylady for 7 days for ignoring the warning.

I know you are all angry and upset, but stick to the facts and don't put my home on the line by making loose comments.

This is a very important topic, but I will have to close the thread if people do not post responsibly.

Brendan
Easy there Brendan you are fueling this argument as much as everybody else
 
Steve -

no argument is taking place here.
just discussion - questions and an honest attempt at answering them.
 
I also mentioned earlier that the lesson that I have learned here is that I will not sign a contract again - in which my deposit is forwarded over to the builder directly.

Perhaps legislation should be enacted - that in all cases when people buy off the plans that their deposits are held in a government type holding account?
Could this be a simple solution to these type of problems occurring in the future?
The builder can apply for loans to the banks for the actual building of a development - monies given to him can be approved by the Government.

I know people don't like to think they have lost a deposit. But you have dodged a bullet here, seriously. You really need to look on the bright side.

You are not as well off as you would have been had you not got caught up in the hysteria of the time.

But you are FAR better off than you would have been had Laragan not hit financial difficulties and been unable to complete.
 
I know people don't like to think they have lost a deposit. But you have dodged a bullet here, seriously. You really need to look on the bright side.

You are not as well off as you would have been had you not got caught up in the hysteria of the time.

But you are FAR better off than you would have been had Laragan not hit financial difficulties and been unable to complete.

You may be right but I think people are annoyed with the way they have been treated and also the fact that if they had withdrawn from the contracts sooner that they would have lost their deposits. However, now that the builders are "pulling out" the depositors are left high and dry.
 
You may be right but I think people are annoyed with the way they have been treated and also the fact that if they had withdrawn from the contracts sooner that they would have lost their deposits. However, now that the builders are "pulling out" the depositors are left high and dry.

I'm sorry but in the current economic situation, people need to get over being annoyed and get on with it!

They are not left high and dry. They are out of their contracts, its over, they have lost their deposits, it hurts, and now they can move on. There is no cash cow available, anywhere, to repay them their money. No amount of crying/complaining/whinging is going to change that.

mf
 
I'm sorry but in the current economic situation, people need to get over being annoyed and get on with it!

They are not left high and dry. They are out of their contracts, its over, they have lost their deposits, it hurts, and now they can move on. There is no cash cow available, anywhere, to repay them their money. No amount of crying/complaining/whinging is going to change that.

mf

It is not right that we just accept as system that does not protect the people going forward.

Also, some people are left high and dry as they have lost their deposits they now have no deposits available to purchase a property even at a discount. As you say there is no money anywhere so how to you suggest these people make a start on getting a second deposit for their first property!

This crying etc. that you refer to is what has made Laragan say that they will sell the properties at a 50% discount! So the crying etc. that you refer to has done something!
 
Jack this might sound a bit trite, but you cannot protect people from their own bad decisions, nor should you. Signing a contract for the purchase of an apartment to be constructed at some point in the future is always going to be a gamble. When you do something like that you take a risk. Risks don't always pay off. I'm sorry for anyone who loses €15/€20k of hard earned money, but they should take it as a lesson learned and move on.

It seems to me that people are chasing around looking for someone to blame. And what happens if they find someone who did something wrong/made a mistake? To sue someone for damages you must first prove a loss. At the end of the day if those properties had been completed 2 years ago and all the purchases closed, the purchasers would be sitting on negative equity of €100k plus each.

None of the purchasers have made a financial loss. Time to count their chickens and move on!
 
Hi Jack, MF1 -

mf1, what jack is saying here is correct here.

Just to say briefly that at the creditors meeting there were a number of people who are going to have great difficulty with saving up a deposit of around €15,000 to €20,000.

This is because of a variety of reasons - but mostly just the recent wage cuts that they have experienced, the difficulty in getting loans from banks and building societies, and some people have been put on 2 to 3 days weeks - they are now on the live register.

We know that we have escaped negative equity - but we also feel that our deposits should be protected in a situation like this - e.g the Homebond Certification primarily.

This is a serious issue. A formal legal review needs to be undertaken - how many people buy houses that are insured by Homebond? Nearly everyone I think these days.
 
The question of the Homebond Insurance Certification has been commented
upon at the Insolvency Journal:

Laragan Scheme upsets home buyers

Look at:

[broken link removed]

So this proves that this topic is worth out while discussing, people have noticed some of the questions that we have raised here.

Perhaps this issue around the Homebond Certification will be discussed on Vincent Browne or Newstalk or RTE?
 
Hi Andy,

I agree with you that there is an issue with homebond. It arose because the construction period in your contracts was unusually long. It would not be at all typical to have a construction period longer than 2 years. I think the laragan experience has drawn attention to the problem and purchaser solicitors will be extremely careful in the future.

Personally I would always strongly advise a client against purchasing with a contruction period that long. If they insist on it then I will advise that we insist that the vendor procure insurance for the entirety of the construction period. If they cannot do so then the deposit must be held by the vendor's solicitor as stakeholder.

It's possible that some solicitors for some of the purchasers on this development did not foresee the issue when contracts were signed (frankly I'm not 100% sure that it would have occurred to me if I had acted). I still can't see any way this helps purchasers today to get their deposit back however. Homebond is only obliged to comply with the original policy. The builder, from the sounds of things, had no obligation to get more insurance. And even if the solicitor could be blamed for not anticipating all of this (which I think is a bit of a stretch) I don't think any purchaser would have a case against his/her solicitor. As I said, a purchaser must first prove that they suffered a loss.

Kate.
 
andycole, I do appreciate your position and I think you are being very level headed and sensible in trying to deal with the minutiae of what is actually a hugely complex situation.

I don't think anyone is taking pleasure from the people who have lost their deposit - I think its more a question of being realistic. It is true that many people will not be able to save that kind of money again easily or at all BUT there is a harshness in the current climate and we are all facing that. Many people have seen the pensions and shareholdings wiped out and this situation is akin to that.

I can't answer the Homebond situation for you - I do think alarm bells should have gone off about the cover only extending for 24 months but Homebond is basically a CIF body and the Law Society have always said that buying a new home from a limited company carries risks. No-one wanted to listen to that when they said it and it did not mean very much for years and it is only when it all hits the fan that everyone starts asking questions.

mf
 
Jack this might sound a bit trite, but you cannot protect people from their own bad decisions, nor should you.

I dont think that it is fair to say that these people made bad decisions. They worked hard to save for a deposit to buy a property. Many of these people are "normal people" and should be able to rely on the system to protect them.

If I go into a shop and buy a shirt that falls apart you cannot say that I made a bad decision but rather the shop was selling rubbish. Luckily there are laws and agencies that protect me as a consumer! The system of buying houses off the plans is inadequate. I would feel different if Laragan delivered on time in that case I would say that these people were unlucky!

These people may also have been trying to be clever in that they might not have been able to afford the property at the time but that would by the time the development was completed.
 
It's possible that some solicitors for some of the purchasers on this development did not foresee the issue when contracts were signed (frankly I'm not 100% sure that it would have occurred to me if I had acted).
Kate.

Do we not hire solicitors to look after our interests?
 
You did not refer to the rest of kate10's post

"And even if the solicitor could be blamed for not anticipating all of this (which I think is a bit of a stretch) I don't think any purchaser would have a case against his/her solicitor. As I said, a purchaser must first prove that they suffered a loss."

What is the actual loss? If they had proceeded and the deal had concluded, they would have lost even more in terms of negative equity.

mf
 
You did not refer to the rest of kate10's post

"And even if the solicitor could be blamed for not anticipating all of this (which I think is a bit of a stretch) I don't think any purchaser would have a case against his/her solicitor. As I said, a purchaser must first prove that they suffered a loss."

What is the actual loss? If they had proceeded and the deal had concluded, they would have lost even more in terms of negative equity.

mf

Sorry, granted yes the way the way the markets have changed creates a possible financial benefit to the purchasers. However, that is looking at the glass half full. The system appears to allow to let a developer take as long as they want to complete a development with no protection to the purchaser should the developer fail to deliver.

Kate if you ordered a piece of furniture and paid a deposit but were left to wait and wait passed the promised date of deliver would you say you made a bad decision, sit patiently on the floor waiting for the furniture to arrive then eventually just buy another piece of furniture elsewhere. And never ask/demand your money back?

What about the fact that the company was allowed to use the depositors money to finance the development with no homebond in place.

Their actual loss is their deposit.

The depositors might be lucky when you compare 2006 prices to now but who knows what the prices will be like in 2016 when some of these people might be lucky and have their deposit saved up again!
 
Kate if you ordered a piece of furniture and paid a deposit but were left to wait and wait passed the promised date of deliver would you say you made a bad decision, sit patiently on the floor waiting for the furniture to arrive then eventually just buy another piece of furniture elsewhere. And never ask/demand your money back?

That is exactly what happened to a lot of people who paid a deposit for furniture to shops which subsequently went to the wall.

Brendan
 
That is exactly what happened to a lot of people who paid a deposit for furniture to shops which subsequently went to the wall.

Brendan

Yes, but people are becoming aware that had they paid by credit card that they would be insured. Anyway, did that make their decision to shop where they did a "bad decision".
 
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