Deposit on house but bank won't lend full amount.... What happens now?

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colly

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About a year ago a friend of mine bought an house with his girlfriend. They bought it off the plans, paid 385k and put down a 10k deposit.

It is now ready to move in to, just being snagged. However the bank got the property valued, and have it a max of 320k.

He obviously cannot come up with 65k, so he's Kinda screwed.

He says that he will loose his 10k deposit if he cannot go through with it - is this true? I would have thought that if the bank will not lend you the money, then is it not your fault and you'd get your deposit back.

The only other way around it is to get the builder to drop the price. Are they likely to drop their price so they can sell it, rather than having it lying idle? Would they drop 65k? It's in Station Point in Clongriffin.

Has anyone had dealing with Barina Construction re price negotiation.

Any other advice appreciated.
Thanks
 
If you sign a contract to buy, it's up to you to make sure you know how you intend to finance it. If you cannot subsequently obtain the finance it might not be your fault but that's of no concern to the builder. You've breached the contract. The builder can withold the deposit.

In fact, the builder can attempt to force you through the courts to complete the agreed purchase, but this is rare as the builder would know it might be difficult to force someone to buy something they simply cannot afford.

It's certainly worth attempting to negotiate with the builder, if your friend still wants to buy it.
 
Your friend could let the sale fall through forfeit his deposit and then make a bid for the property at €320k but builder might not be very happy with him.
 
your friend should get down on his knees and thank his bank manager for only losing him 10k when he could have lost multiples of this over the life of the original mortgage. Then inform the builder of the situation and tell him he's not proceeding. Builder won't sue.

Then he should think about putting in a sneaky bid of 220k on a similar property ;)
 
jhegarty said:
That's a very big statement given the state some builders are in now
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I agree, it is a big statement and here's why - can you point to examples of builders pursuing home buyers through the courts for non-performance?

it's not worth their while, if the punter won't\can't stump up the cash, there's little they can do bar hang on to the deposit and try to flog the property at the reduced price
 
I wouldn't be so sure.
We're in unchartered territory here, so I wouldn't look too much to what happened in the tiger years.
If(*) the banks take a tough line with the developers, the developers will in turn be forced to take a tough line with the OPs friends.
(*) I believe If will become When.
 
tiger said:
I wouldn't be so sure.
We're in unchartered territory here, so I wouldn't look too much to what happened in the tiger years.
If(*) the banks take a tough line with the developers, the developers will in turn be forced to take a tough line with the OPs friends.
(*) I believe If will become When.
Click to expand...

very well, please supply the details when this feeling becomes a reality
 
Kemo_Sabe said:
I agree, it is a big statement and here's why - can you point to examples of builders pursuing home buyers through the courts for non-performance?

it's not worth their while, if the punter won't\can't stump up the cash, there's little they can do bar hang on to the deposit and try to flog the property at the reduced price
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I have a friend who is being pursued by the developer in Carrickmines at the moment. My mate thought the worst case scenario was that he would have to walk away from his deposit. Unfortnately not.
 
Sangster said:
I have a friend who is being pursued by the developer in Carrickmines at the moment. My mate thought the worst case scenario was that he would have to walk away from his deposit. Unfortnately not.
Click to expand...

has it gone to Court yet?
 
The friend should explain what has happened to the Builder (showing written documentation from bank) and offer to close out at €320. The Builder may or may not accept this. The Builder can pursue your friend through the Courts for the full sum as contracts have been signed - of course the Builder does not want to do this but his bank may leave him with no choice. Get your friend to talk to his Solicitor - there may be soom loophole that could be taken advantage of - for example, was the house finished by the completion date? If not, perhaps they could use this to try and get out of the contract.
 
Kemo_Sabe said:
very well, please supply the details when this feeling becomes a reality
Click to expand...

My girlfriends brother and three other couples are being sued to complete by one developer in the same development in North County Dublin. Due to be heard by the courts in the next few weeks. Will let you know the outcome.
 
Can you say what development it is? I would be interested to know the outcome of that.
 
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