# Pulling out from House Purchase Deal



## pahadia (17 Apr 2007)

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


----------



## mf1 (17 Apr 2007)

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


----------



## Moro (8 May 2007)

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???


----------



## mf1 (8 May 2007)

" 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


----------



## Moro (8 May 2007)

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??


----------



## Ham Slicer (8 May 2007)

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.


----------



## Moro (9 May 2007)

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.


----------



## mf1 (9 May 2007)

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


----------



## simplyjoe (9 May 2007)

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.


----------



## Moro (10 May 2007)

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.


----------



## Red (10 May 2007)

Builder can still persue you in court for breach on contract and force you to pay up plus cover his expenses etc


----------



## Moro (10 May 2007)

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.


----------



## tiger (10 May 2007)

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.


----------



## monkeyboy (10 May 2007)

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.



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.


----------



## Stephenkelly (10 May 2007)

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!


----------



## Moro (10 May 2007)

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.


----------



## Moro (10 May 2007)

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.


----------



## Red (10 May 2007)

If it is such a major leak , why was it not picked up in the snagging process pre house close??


----------



## monkeyboy (10 May 2007)

Red said:


> If it is such a major leak , why was it not picked up in the snagging process pre house close??



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?!?


----------



## Moro (10 May 2007)

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.


----------



## kkontour (10 May 2007)

>1) What is my legal position ? Am I in position to pull out or have to complete the transaction.<
Did you check the completion date on the contract.  My contract said 18months from signing of the contract.
If the builder goes outside this he could be in breach of contract.


----------



## mf1 (10 May 2007)

"Think solicitors need to impress on people a bit more the significance of the contract signing. "

Why is it always someone elses fault? 

Like I said I have sympathy but the harsh reality is that you and you alone decided to do this and now that it is looking like not such a great idea, you want out. 

Can you hand on heart say that you did not realise  that the contract was binding and that you thought you could change your mind afterwards?

mf


----------



## simplyjoe (10 May 2007)

Even though my original post was hard on Moro some lessons need to be learned from the madness of the last few years.Solicitors need to be more formal with their clients and advise them of the consequences of their actions.Buyer beware. Know what you are signing. Ask the relevant questions. I dont though have much sympathy. You had the benefit of independant legal advice. If there were no late completion clauses then it is tough luck. As regards the leak you may still have a case if the work completed can be traced back to the builders. If you used a bonded engineer and he didn't spot it you have the makings of a case against him.I build a house using a fixed price contract with a builder. His roofing (internal) was not in agreement with the plans and my engineer did not spot it. When selling the house the buyers engineer spotted it. We are in the process of suing the engineer/builder.


----------



## Moro (14 May 2007)

I agree with the above, the solicitors don't impress on people enough the binding nature of the contract when they are getting people to sign. They just want you to sign and that's it. Nothing about you're completely bound by it no matter what. I came under a lot of pressure to sign the contract in a hurry last year so I wouldn't recommend people to do this. Also if you're buying off the plans and the property is not due for completion for another 6mths or more, your life can change a lot. Unfortunately, things happen to people in life like they change jobs, unexpected circumstances, pregnancy etc which can dramatically alter their financial circumstances in the intervening period before the property is completed and sale is closed. It's scary to think that no matter what happens in your life between contracts and completion that you are bound to go through with sale regardless. I realise that the builders have to cover themselves but surely a minimum financial penalty would cover these kind of situations. What happens to a person who is made redundant and simply cannot go through with sale because they are unable to make repayments??


----------



## monkeyboy (14 May 2007)

Moro said:


> What happens to a person who is made redundant and simply cannot go through with sale because they are unable to make repayments??



What happens to the person who closed and then subsequently gets laid off and cant make their payments?

Why should they have any less "right" to "get out" of something binding...

Its a contract for sale of a house, with a 25/30 yr mortgage, surely its just common sense to understand that its binding and you cant wear it once with the tag on and chance changing it for another.


----------



## Moro (15 May 2007)

In that case, the same applies for the faulty workmanship by the builders. You wouldn't buy a jumper with a hole in it either. The standard of workmanship is appauling. As for the leak and the smell of the sewage from the bathroom, they say they fixed them but even an engineer can't tell if they will occur again. You are bascially bound to pay over your money no matter what's wrong with the place after completion.


----------



## room305 (15 May 2007)

Moro said:


> In that case, the same applies for the faulty workmanship by the builders. You wouldn't buy a jumper with a hole in it either. The standard of workmanship is appauling. As for the leak and the smell of the sewage from the bathroom, they say they fixed them but even an engineer can't tell if they will occur again. You are bascially bound to pay over your money no matter what's wrong with the place after completion.



Have you contacted the developer about not closing? Are there unsold units in the development? I'm sure you could intimate that although he is fully entitled to force you to close on the deal, you will be warning off prospective buyers to prevent them from making a similar mistake (e.g. offering to show them the "quality" of workmanship in your place when they show up for viewings etc.). In a time characterised by nervous buyers, the developer might judge it would be better not to force you to close.


----------



## Moro (15 May 2007)

Yes, that's a good point. I have been in contact with them regarding the faults but I have never actually said I was thinking of pulling out of the deal because of them. I was just about to close the sale again this week when I've encountered another problem. Just as the leak has been fixed, there's now a smell of sewage coming from the ensuite bathroom. It comes and goes but the neighbour has also had it. They told me it's because it's not being used but she's in there over a month and still has it. How am I going to sell the place or rent it or live there if there is a smell of sewage from bathroom?? I can't believe it's one thing after another. I really feel so frustrated at this stage that I feel like telling them to shove it only they have €40K belong to me. Has anybody else had a similar experience? Would you hand over €265K for a place with a smell of sewage in bathroom? I really don't know what I'm going to do. They told me there is nothing they can do with it as it comes and goes. Am I still contractually obliged to go through with this?? I might just have to talk to builders again and see what they say.


----------



## Red (15 May 2007)

A smell of sewage not uncommon in new build bathrooms after heavy rain. A lot of dirt, debris, builders rubble in the drains. It will disappear with time . Give the drainage system time to settle down


----------



## Bronte (16 May 2007)

I don't think buying a jumper is comparable to buying a house.


----------



## chum (16 May 2007)

lawyers need to word contracts to protect buyers. contracts confirm buyers ability to pay morgage amount. if buyers status changes and they are no longer able to fufill morgage requirements loss of job ,injury no longer able to work these scenarios should be written into contract.
builders lawyers shall  object but these protections for buyers are common in us. buyers lawyers need to do more to protect the interest of their clients and buyers need to demand more protections in house purchase process.contract states bank shall give morgage under agreed circumstances if the buyer status  changes contract is void and any deposit paid is returned.


----------



## mf1 (16 May 2007)

People need to not sign contracts if they do not understand them and are afraid of changed circumstances. 

Loan approval clauses were common enough until c.1997(?) (when did the Gold Rush start?) and are likely to come back into play again I suspect. 

It is now a buyers market - this power shift benefits purchasers.

mf


----------



## Moro (16 May 2007)

The builders solicitors just wrote to my solicitors today offering to pull out of contract if I do not wish to proceed. My solicitor say it's unusual. They may have another buyer. I hadn't even asked for this so it looks like it's not as difficult as everybody initially thought. I just have to make a final decision now on whether to proceed or not. I still have a problem with odour in bathroom from toilet? What do people think of this?


----------



## Moro (16 May 2007)

Aileen2 said:


> I don't think buying a jumper is comparable to buying a house.


 

Correct. It a very large and expensive jumper and therefore has to of merchantible quality before you close.


----------



## Bronte (21 May 2007)

But Moro isn't this exactly what you wanted - the builder is offering to let you out of the contract and return the deposit.  You absolutely wanted to pull out of the purchase due to increased repayments and faults in the house plus you felt trapped by the contract and now you're free?


----------



## Moro (22 May 2007)

You're right, Aileen. I suppose, I've spent so long thinking that I have to go through with it that my mind hasn't adjusted to the idea that I can walk away yet. I will still have lost some money with legal fees, some furnishing expenses and drawing down on my mortgage but not my deposit at least. The builders offered to give me money back and contribution towards expenses incurred or they told me my other option is sell it as they are not selling for €20k more than I paid for it but I'm sure if it's worth taking the risk that it won't sell. I'd need to make 10k over what I paid to cover the costs anyway. So there's my 2 options.


----------

