Anybody ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad?

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rocky6

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Anybodey ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad,Relative was in the middle of purchasing an Appartment in Hungary but had no option to terminate the contract,,now hes been told by the EA that he will loose 10-15% of the price as a penalty,
 
Re: Contract Penalties

Anything is possible in Hungary - people have a tendency to accept what these clapped up unprofessional property companies say without question. You can take it that unless it is in writing before you pay over the money (ie forms part of a contract) you should be entitled to get your money back. Now, whether you do or not is another question. If your relly paid over the money in Hungary then you most likely would be subject to Hungarian Law and if in Ireland then Irish Law. Get a good lawyer in the right jurisdiction and get your money back.
 
Re: Contract Penalties

he paid 2k deposit and then 10% on signed preliminary contract and its not stated on the preliminary contracts on the 10-15% penalty,,,do u think he has a good case ?
 
Re: Contract Penalties

Who did he pay it to ? Irish or Hungarian Operation ? What did the contract say about the deposit - I would be surprised to see a contract without penalty provisions. If it is an Irish Company and there is any evidence that your relation has been unjustly and unfairly treated then you can complain to the financial ombudsman. I would be concerned with the notion of a preliminary contract - he either contracted or didn't. It is what is in the contract that counts. No reference to it then demand hyour money back in writing. No response then go to the ombudsman. We are going back to the days of spanish time share coercion.
 
Re: Contract Penalties

rocky6 said:
he paid 2k deposit and then 10% on signed preliminary contract and its not stated on the preliminary contracts on the 10-15% penalty,,,do u think he has a good case ?
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Assume the 10% is 20,000 and that your relative will lose say 2,500 euro. Get legal advice at a fixed price say 250 euros but be careful about getting involved in a legal action in a foreign country over 2,500 euros. It could just be throwing more money down the drain.

Having a legal scrap in Ireland over 2,500 euros may be worth it but abroad in any country in most cases not worth the effort.
 
Re: Anybodey ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad?

Hungary has a very open legal system. If he's entitled to the money back, then he will get it. If he signed a contract though, then he may have to accept that it's his own fault if he pulls out. It would be the same in Ireland as here.

If you need some referrals to good bilingual lawyers in Budapest, just let me know.
 
Re: Contract Penalties

Whatsamatter said:
Anything is possible in Hungary -
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Have you had particular bad experience in Hungary? Could you back up your statement? Is there anything in Hungary which is worse than Ireland which readers should be aware of?

Thanks
 
Re: Anybodey ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad?

rocky6 said:
Anybodey ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad,Relative was in the middle of purchasing an Appartment in Hungary but had no option to terminate the contract,,now hes been told by the EA that he will loose 10-15% of the price as a penalty,
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Check the contracts which have been signed. If this is in the contracts the solicitor your relative used for the purchase should have pointed this out to him. If it wasnt pointed out to him anoother case of not having viable legal support?
 
Re: Anybodey ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad?

You have to get a solicitor to check this contract. It is in my experience that when preliminary sales contracts are signed, there is a penalty if the buyer backs out of the purchase. If this penalty is not stated in the contract then you must check what the legal system is in the country. Also Whastamatter makes a good point in saying that it depends on the jurisdiction that applies in this case, is it Hungarian or Irish Law.

The only way I know you can back out of a pre signed contract is stating a cause of Force majeure, which is in French Law, but it may apply in other countries. Get your brother to talk to a solicitor over there and completely agree on getting this solicitor to commit to a fixed fee.
 
Re: Anybodey ever hear of a 10 - 15 % penalty for pulling out of a purchase abroad?

If you need a good Hungarian lawyer, who speaks perfect English do get in touch with Budapest.

I used a lawyer he recommended to me & she is excellent.

When buying a classic apt in Budapest I know it was pointed out to me that if I defaulted after signing the contract I lost my deposit. If the seller backed out they had to pay me double my deposit. I'm not sure if this applies to new builds though.
 
You didn't simply pull out of a purchase as far as I can see -- you defaulted on a contract. In the same way that the seller would be liable if he or she defaulted, you are of course also liable.

It is called a contract because it is a contract, simple as that. I don't think anyone should be blaming the legal system in Hungary, which is very fair and open in my experience. Describing this as a penalty is not strictly accurate, to be fair.

I am aware of at least two Irish agencies that have bent over backwards to facilitate people who wanted to change their minds and default; I know of at least ten instances where the agencies in question managed to resell the properties and did not charge a commission to the defaulting buyer. I am also aware that at least one agency has now stopped doing this as a matter of policy, as they were getting p***ed off by amateur investors who didn't know what they wanted and who bent like straws in every wind.

If you bought through an Irish agency you might be able to ask them to try to lay off your property, but they have no obligation to do so. If you bought through a Hungarian outfit, they are generally much more hardnosed and are unlikely to have much sympathy for you.

The reality is that the contract was designed to protect you and the seller; in this case you are the defaulting party.

Why not just buy the property? Try to renegotiate a bit on the price, the seller might prefer that to a long drawn out legal battle. A lot of property in the right areas in Budapest makes for a good long term investment, now that the government is getting to grips with the economy and seems to be setting the groundwork for a more stable economic future.

Depends of course on what you paid for the property too!
 
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