Has anybody pulled out of a contract to purchase an apartment and been pursued

Hi,

We signed contracts to purchase an apartment in D.8 off the plans at the end of 2006. The apartment has been complete for some time, but unfortunately we have not been able to obtain a mortgage to proceed with the purchase. The developer's solicitors are now initiating proceedings for specific performance etc. In fairness to the developer they were agreeable to negotiating downwards on the original price, but not close to what a current valuation would be! If we were in a position to purchase at the builders revised price, there would still be a shortfall of approx. 100k. which unfortunately we don't have. We were buying this property as an investment; we have one other property rented apart from our family home. However, both of these properties are now in negative equity.

I know we were naive to sign contracts, without having the means now to complete, but we could not foresee what was going to happen with the market. I am just wondering if any other people out there have been through the courts, and what the likely outcome is. Obviously, we do not have the means to complete the purchase. We do have a solicitor, but we have received limited advice from them. Thanks.

I read of a case in Irish Times last week or week before, woman who pulled out of contract was pursued for the money - and the court found in the developers favour - cost were also awarded against her.

Judge Linnane recently ordered a person to complete the purchase of an apartment in the Spencer Dock development in Dublin. The purchaser had paid a deposit of €20,000 and the balance owed was €505,000. The aprtment is now worth somewhere around the €300,000 mark and the Judge ordered the purchaser to pay to the development company €505,000. The purchaser was also ordered to pay the costs of the development company in having to come to Court over the matter.

A friend of mine got out of a contract to buy a completed apt for about half a million by forfeiting his deposit and paying a similar sum to the developer.This person also had to sign a confidentiality clause.

I would say that course of action is unlikely now developers have that recent Court judgement as a precedence.

missdaisy said:

I would say that course of action is unlikely now developers have that recent Court judgement as a precedence.

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This was last week that my friend did this.

in fairness you bought the ap at the time when the price was much higher i.e. you will be expected to honour the agreement made then, not now
question - did you really sign a contract BEFORE getting a mortgage?

Is there any clause in the contract making the contract subject to you obtaining the loan?

nextyear said:

A friend of mine got out of a contract to buy a completed apt for about half a million by forfeiting his deposit and paying a similar sum to the developer.This person also had to sign a confidentiality clause.

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And was telling you not a breach of that confidentiality?

haminka1 said:

in fairness you bought the ap at the time when the price was much higher i.e. you will be expected to honour the agreement made then, not now
question - did you really sign a contract BEFORE getting a mortgage?

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Hi Haminka,

We did stupidly sign the contract without first getting mortgage approval. However, I did consult with a mortgage broker at the time, and he informed me that it was possible figures wise to obtain a mortgage. We felt under pressure to sign within 21 days as they were including some extra's in the price if you did so. I have heard that even if we had mortgage approval at the time, it would not be applicable now because of the time period that has elapsed.

missdaisy said:

Is there any clause in the contract making the contract subject to you obtaining the loan?

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Hi missdaisy,

Unfortunately we did not get the solicitor to put this clause in the contract. He has told me that even if he had put in a clause, the developer would not have accepted it, and then you would be left with the choice of whether to proceed or not.

breezer said:

We felt under pressure to sign within 21 days as they were including some extra's in the price if you did so.

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I just don't understand this. Nobody put you under pressure at all.

Basically you are trying to get out of a legally binding contract because the value of it has dropped. Well if you have nothing, as in no assets or no job then the builder will probably not sue for specific performance, but if you have money or property or a good job then you're out of luck.

You can either now beg borrow or steal to complete the contract, or negotiate with the builder some more, or negotiate that you let go the deposit plus another lump sum to get rid of him, that's if he's agreeable.

nextyear said:

A friend of mine got out of a contract to buy a completed apt for about half a million by forfeiting his deposit and paying a similar sum to the developer.This person also had to sign a confidentiality clause.

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This is an excellent idea to help people who want to get out of contracts, subject of course to the developer being agreeable.

Its rare but occasionally theres a completion date in the contract for when the property should be finished. I've heard of one person getting out of contracts where this date has passed, and the building hasn't been started. I think the builder tried to keep the deposit but he had to return it and pay costs. But if the building/property is ready, then I don't think you'll get out of it.

Apparently, the developers are waiting until Nama goes through.

Next, they're waiting for banks to resume giving loans.

THEN they're going to pursue people.

Try to make a deal with the developer to get out of it!! A brown envelope under the table might do the trick knowing this country.

You're saying you were naive to sign the contracts but this isn't true at all. Many, many people in this country made hundreds of thousands by signing contracts and waiting for the values to boom. You were just unlucky.

tenchi-fan said:

You're saying you were naive to sign the contracts but this isn't true at all. Many, many people in this country made hundreds of thousands by signing contracts and waiting for the values to boom. You were just unlucky.

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No, he was naive. The people who made hundreds of thousands were also naive - it was they who were lucky, rather than the OP being unlucky.

Only discovered this thread today!!!
Im a first time buyer who signed a contract in 2007, had mortgage approval at the time but when apartment was ready 2 years later, they refused it. Now builder suing me for specific performance. Would love to complete but cant get the cash anywhere. Builders wont negotiate, wont even return my calls..

Bring your contract to the solicitor and see if there is a way to wriggle out of it. Maybe the contract mentions "subject to mortgage approval" or something like that.

I know someone who got out of their contract because the seller had not signed their part of the contract.

Breezer, I am in the same position; put deposit on Apt in '06, unable to complete now and being taken to court by developer. Apt complex was not finished within the time stated in the contract. Had mortagae approved in '06/'07, lost job and can't get mortgage now. Do I have a case???