Pulling out from House Purchase Deal

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pahadia

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Hi,
I have bought house last year off the plans. I deposited €10K and signed the contract.Original complition date was September 2006. But builder kept on extending complition date and it looks like it may take another 6 months before it is finally completed.
With continuous interest rate rise,predicted property slowdown and frustration from builders side ,I am thinking to pull out from deal. Regarding this I have following quaries.

1) What is my legal position ? Am I in position to pull out or have to complete the transaction.
2) Any chance of getting deposit back ?

Many Thanks
Pahadia
 
1) What is my legal position ? Am I in position to pull out or have to complete the transaction.

You are legally obliged, and can be compelled by the builder, to complete, if there are signed contracts. If you are very fortunate and this is a popular development which is sold out and has a waiting list of keen would be purchasers you may be able to persuade your builder to release you without penalty from the contract. Or if you can find someone else to buy the property.........

2) Any chance of getting deposit back ?
Only likely if someone else takes your place or if builder can easily sell again perhaps even at a profit.

You'll have to try and negotiate.

mf
 
Hi Pahadia,

I'm in same position except my property is just finished now and there was a leak which they have fixed. My solicitors tell me I'm obliged to go ahead. I am considering forfeiting my deposit of €13,250 but they have €40K altogether so I'm afraid I won't get this back. I bought mine off plans last summer and signed contracts in November. I really feel trapped with it now and I've had a leak but there stills seems no way out. Nobody seems to be able to tell me one anyway. Feel like I've made a huge mistake and may not be able to sell or afford repayments with interest rate hikes.


Anybody know of any solutions out there???
 
" My solicitors tell me I'm obliged to go ahead.

Feel like I've made a huge mistake.

Nobody seems to be able to tell me one anyway."

This is why it is so important for people to understand just how serious a house/apartment purchase is - once you sign those contracts, you are legally obliged ( unless you are very very lucky and are let out) to complete.

The only way out is if the builder will let you and if they do not have another purchaser they will be at a loss.

mf
 
Yes, unfortunately, the increase in interest rates and property slowdown was something that I did not envisage between the signing of contracts last year and close of sale now. The builders can't sell the apartments now so I doubt if they will let anybody out. I'm considering forfeiting my deposit with fall in market prices. Will I get rest of my contract money back??
 
I was in a similar position a few years ago when I became seriously ill and had to pull out of the deal after signing K.

Only after explaining to developer the nature of my illness did he excuse me from my obligations to purchase. I was lucky enough to get all my money returned also - about 10K from what I can recall.

I hope things work out for your lads.
 
Hope you're ok. Yes, unfortunately things can change dramatically between the signing of a contract and completion when you buy off plans. I had a leak just before the sale was due to close but it's supposed to be fixed now. Even that apparently doesn't get you out of the contract and you're still obliged to close. It looks like they have you every way.
 
To be fair, Ham Slicer was in this position some time ago. The market has shifted dramatically since then. He/she was just lucky.

I have trouble understanding why you think you should be able to get out of the contract. And why you think "It looks like they have you every way."

Certainly, I would be unhappy myself if it was happening to me and I would be trying to persuade the developer to release me but if, as you say, "The builders can't sell the apartments now so I doubt if they will let anybody out." I'd be trying to figure out all the angles but I'd accept that I was legally bound to complete.

mf
 
This is risk. You took the risk of values dropping and interest rates rising. You signed the contracts with the benefit of legal advice. Things did not go well and you now expect the builder to stump up. Providing the builder stuck to his side of the contract - tough.What if the price of the apartments went up and interest rates went down - would it be fair for the builder to say he now needed extra money? I think not!
Posters seem to think that they can pull out and lose just the deposit. You may find that you can be followed for the remainder of the money.
 
Yes but what if the unfortunate purchaser who may be unable to make repayments because of the number of hikes in interest rates which are phenomenal. The builders delay on completion and then you end up losing. If this apartment had been completed on schedule, I could've sold before Xmas if I wished. Then the close is delayed further because of a leak and I am losing all the time as I'm making mortgage repayments to the bank. The builders can take the hit. They were charging way over the odds for their properties in the first place. I don't have any sympathy on them at all. They've made more than enough money on the backs of young buyers at this stage. I wouldn't recommend anyone to buy their property off the plans. I discovered mine was down a metre from the next property on completion which has contributed to the leak problem. I had requested full site plans several times but was only given a basic plan without elevations. I cannot understand people who have sympathy for the builders after our experience in the last decade of boom. They took full advantage.
 
Builder can still persue you in court for breach on contract and force you to pay up plus cover his expenses etc
 
What if you actually think you won't be able to make repayments with 2 interest rate rises predicted in June and September followed by 3 since you put down the deposit and signed contracts. That's 5 rises before the apartment is even completed. Even the stress test the bank uses doesn't allow for this.
 
Banks are supposed to stress test to 2% which is 8 interest rate increases. Interest rates aren't "high" at the moment, they're only getting back to normal and still haven't reached the level they were at in 2000.
 
Moro said:
What if you actually think you won't be able to make repayments with 2 interest rate rises predicted in June and September followed by 3 since you put down the deposit and signed contracts. That's 5 rises before the apartment is even completed. Even the stress test the bank uses doesn't allow for this.
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The rates will still be lower than only as recently as 00/01.

It is very reasonably forseeable that when buying @ record lows that rates will increase over time. No concern of the builders. Indeed they are likely paying increased rates on their development finance , feeling the pinch also and will not be keen to let an agreed sale go.

Its not pity for builders its just the facts.
 
You are not obliged to stick with your current mortgage. Approach Ulster Bank and see if you will qualify for the mortgage with them. You will get a three year fixed rate of 4.65%. This is a fantastic rate even by standards 12/18 months ago. It is expected that there will be two more rate incrases befor they base off. They are then expected to drop late next year.

New houses are often delayed and often come with leaks. Look forward to moving in and stop moaning. You are one of the lucky ones who can afford a house these days. I know it is a big investment but it's about time to move out of mammy and daddys. Look forward to creating your own home - what's done is done!
 
Yes, fortunately the prices were much lower in 2000/01 and previous years so that's not much consolation. I will just have to hope that I will be able to make repayments. I've already had to make a full repayment and I don't even have the keys as the builders had a leak before the sale was due to close 6wks ago. Nobody is going to compensate me for my loss because of the leak however. I've ended up paying rent and a mortgage repayment this month because of they failed to inform that there was a leak before the sale closed. I'm also now buying a new property that has had a leak. It feels a bit like buying a jumper with a hole in it that has mended and paying full price. As I said before, I seem to be losing because of delays, leaks, falling prices etc not the builders. It's just not worth the amount of sleepless nights it can cause.
 
Ya, I know I sound a bit moany but I am really really worried about the whole situation and feel a bit trapped. Think solicitors need to impress on people a bit more the significance of the contract signing. It also looks like my job is now going to bring me to another part of the country so I may even be living there so might have to sell anyway. By the way, I'm not living with mammy & daddy!! Anyway, I will just have to stop stressing about it before I go crazy. There's prob other people who are in same boat at mo.
 
If it is such a major leak , why was it not picked up in the snagging process pre house close??
 
Red said:
If it is such a major leak , why was it not picked up in the snagging process pre house close??
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C'mon you can never catch a leak til it rains, even then they are little feckers to track down!

unlkess it was a hole in the roof with day light coming through how would you know?!?
 
It didn't occur until after the snag was done. Also it behind the kitchen units on the wall and the floor so would've been difficult to see anyway. They let it slip when I rang to collect my keys as somebody was in there trying to see where it was coming from. I had to stop close of sale. The neighbour tells me she has a really bad smell in her bathroom since she moved in. No way of knowing if it will occur again and still have to go ahead. There is homebond on it.
 
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