Laragan customers lose their deposits

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foxylady said:
Mob speaking for myself , I was not aware of the time limits on this and nor was it pointed out on signing contracts. Also our solicitor allowed the contract to be extended from 18 to 24 months when the time limit would have already expired without gaining any further insurance or pointing this out to us at the time.
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Do you think your solicitor is solely responsible for this situation?
Do you think the economy has anything to do with it? At any stage, before the Examinership process, did you have any concerns about the builders liquidity and did you consider what would happen if they went bust?
Do you think your solicitor should be held responsible for paying you your deposit?
What steps have you been taking to make yourself aware of your legal remedies - Over the years, since this saga first started unfolding?
Have you paid your solicitor?

mf
 
Each person has to take resonsibility for signing the contract that was put in front of them - the deposit was being forwarded to the builder in this example - this was a condition of the contract - I was aware that the deposit was being forwarded to the builder - and as this condition was stated clearly I personally feel no one could claim confusion about this - so again each buyer has to take responsibility in being aware that this was happening.

In terms of educating ourselves - presently I am reading the following:

National Consumer Agency - The Home Construction Industry and the Consumer in Ireland - Volume 4.

This is a review of insurance issues - dated November 2008.

In particular the Homebond Insurance Deposit Guarantee is very interesting - especially as I have posted about possible lack of protection that this gives buyers - however this is commented upon in this review.

Recommendations are made within this report also - and these are well made.

So again I do believe that every person has to take personal responsibility in terms of educating themselves about the conditions that appear in contracts.

However is this not a valid point - most people only buy property once, twice or probably at most three times during their lives? But building developers and solicitors are involved in property contracts nearly every week. So in terms of experience and understanding the advantage lies with the developers who write up these contracts and also the solicitors who are involved in reviewing these contracts.
 
mf1 said:
Do you think your solicitor is solely responsible for this situation?
Do you think the economy has anything to do with it? At any stage, before the Examinership process, did you have any concerns about the builders liquidity and did you consider what would happen if they went bust?
Do you think your solicitor should be held responsible for paying you your deposit?
What steps have you been taking to make yourself aware of your legal remedies - Over the years, since this saga first started unfolding?
Have you paid your solicitor?

mf
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I dont think he is solely responsible however I do think he has a lot to answer for. we are first time buyers an not solicitors so not au fait with building agreements or contract. We hired our solicitor in good faith.
All concerns with the development were communicated to the solicitor and in fact everything that was found out about the development was us feeding the info to him and this company seemed to be having problems a long time ago
.
and to answer your question should the solicitor pay the deposit, well if he has messed up well then yes he should be liable for his mistakes
 
"and to answer your question should the solicitor pay the deposit, well if he has messed up well then yes he should be liable for his mistakes"

But can you see that this is the million dollar question? Has your solicitor messed up?

Taking everything into account, is he solely responsible? I think the answer to that is no. I don't know how you behaved during the process, did you ask questions, did you seek to educate yourself on what the process was all about or did you blindly follow everyone else who was buying off the plans? And if the solicitor had spent several hours with you explaining everything, would you have listened and made a calculated decision? I think the answer to that is no - my view is that most ftb's buying off plans are more interested in the flooring and window dressing than in this huge investment.

So, here is another question - are you going to sue your solicitor for your loss? And if everything had gone ahead and you were now in negative equity, so that your loss is considerably less does that make any difference to your thinking? Because if you sue, you will have to prove that this solicitor was negligent and that your current loss stems from that. I don't think you can make that case.

There is a big difference between smarting over a deposit loss and trying to fix blame on someone , anyone AND proving that a solicitor should be held solely responsible for the multiplicity of issues that led to that deposit loss.

mf
 
mf1 said:
"and to answer your question should the solicitor pay the deposit, well if he has messed up well then yes he should be liable for his mistakes"

But can you see that this is the million dollar question? Has your solicitor messed up?

Taking everything into account, is he solely responsible? I think the answer to that is no. I don't know how you behaved during the process, did you ask questions, did you seek to educate yourself on what the process was all about or did you blindly follow everyone else who was buying off the plans? And if the solicitor had spent several hours with you explaining everything, would you have listened and made a calculated decision? I think the answer to that is no - my view is that most ftb's buying off plans are more interested in the flooring and window dressing than in this huge investment.

So, here is another question - are you going to sue your solicitor for your loss? And if everything had gone ahead and you were now in negative equity, so that your loss is considerably less does that make any difference to your thinking? Because if you sue, you will have to prove that this solicitor was negligent and that your current loss stems from that. I don't think you can make that case.

There is a big difference between smarting over a deposit loss and trying to fix blame on someone , anyone AND proving that a solicitor should be held solely responsible for the multiplicity of issues that led to that deposit loss.

mf
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Before signing contracts we asked plenty of questions and whether or not we needed to read the contract and we were told no its straightforward, everything above board. Also the solicitor we hired passed us onto someone else cos he was too busy and then someone else could never or maybe would nevre answer our queries which led us having to go above them, so I dont think this was good practice. Do you?
 
I think we will have to agree to disagree on the respective responsibilities of you, your partner and your solicitor. I don't think the solicitor is responsible for your predicament - I think it is a combination of many factors. You have posted about your predicament many times in the past (approx) 18 months and received some very good advice.

I have a mantra in my office - it is "Shurely Shomebody Elshe Should be held Reshponsible for Thish". As in, bad things should only happen to other people, not to me. And when they hapen to me, then I want somebody else to blame.

My clients hate it but they would hate it even more if I did not try and point out the holes/flaws/ downside of their grievances.

I would just say to you that just because you are aggrieved that it does not automatically mean there is someone who will be held responsible.

mf
 
mf1 said:
I think we will have to agree to disagree on the respective responsibilities of you, your partner and your solicitor. I don't think the solicitor is responsible for your predicament - I think it is a combination of many factors. You have posted about your predicament many times in the past (approx) 18 months and received some very good advice.

I have a mantra in my office - it is "Shurely Shomebody Elshe Should be held Reshponsible for Thish". As in, bad things should only happen to other people, not to me. And when they hapen to me, then I want somebody else to blame.

My clients hate it but they would hate it even more if I did not try and point out the holes/flaws/ downside of their grievances.

I would just say to you that just because you are aggrieved that it does not automatically mean there is someone who will be held responsible.

mf
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I understand what you're saying and will also agree to disagree as we could be arguing this back and forward forever otherwise.
 
Just to add my tuppence worth as a solicitor and purely on the issue of whether a solicitor may be held negligent and liable for the loss of the deposit in any particular case.

For what its worth I think a solicitor who did not point out to their clients all the pitfalls of buying off plans where there wasnt even a hole in the ground at the signing of contracts could be held negligent. One of the pitfalls is the potential expiry of the Homebond deposit cover.

Now I know from bitter experience that at the height of the madness you could be almost eaten alive by ones clients if one had the temerity to suggest that there was a flaw on title or that contracts were unfair or there was a risk etc... and that maybe clients should walk away from the purchase of their "dream home":rolleyes:, I certainly saw the eyes of my clients glaze over when I pointed out all sorts of horrors and having finished speaking would inevitably hear "Yeah thats terrible can I sign my contracts now?" so I dont doubt that solicitors who did point out the problem with the time limits/Homebond deposit etc.. would for the most part have been ignored but unfortunately for my colleages who did not point out the risk that may not get them off the hook.

I also agree that most of those who lost their deposits would prefer that than to have to complete their purchases at the old high price and would happily have walked away from the deposit if given the option by the builders.

However the argument can be made that had they been told by the solicitor about the danger to the deposit they would have walked away and still have the deposit or have bought elsewhere and long since be in a completed dwelling or as time limits edged closer taken action to get back the deposit or negotiated with the builders to request Homebond to extend the timelimits or that the deposit would not be handed over at all
to the builder. As they were not told of the risk they had no opportunity or so the argument may go of doing any of the above(I agree that the chances of them having successfully done any of the above were slim to none).

So while I agree that all the purchasers are damn lucky not to have to proceed with their purchases and are only losing their deposits I do believe that some solicitors may be at risk of being held liable and if so I can only say but for the grace of god go I:eek:


I think however that if the timelimits for completion in the Laragan contracts were actually within the Homebond Time limit purchasers would not be in a better situation as even when the time for work to be completed expires purchasers are not automatically let out of the contract and in order to be let out ( and get back their deposit)would have to sue the builder for breach of the building agreement. There is no guarantee of that having been successful. The reality is that, and hindsight is wonderful, the Homebond deposit cover has been flawed from the very start and the standard agreed Building agreement is also flawed and inadequate on this issue.

All of which is cold comfort to the purchasers and their solicitors!
 
Hi Madangan -

Absolutely I agree with your points -

"I also agree that most of those who lost their deposits would prefer that than to have to complete their purchases at the old high price and would happily have walked away from the deposit if given the option by the builders"

And definitely yes; "all the purchasers are damn lucky not to have to proceed with their purchases and are only losing their deposits"

I don't believe that solicitors are at fault in any way for people who find themselves in a similar situation to the Laragan Developments Ltd situation. People are responsible for reading/understand any contracts put in front of them and also for signing the contracts. The real fight is with the Construction Federation Industry and Homebond, and also the Irish Government for not realising a proper set of regulations to govern the Construction Industry, Irish Developers etc. Wherever self regulation is the norm within any one industry - its proved disastrous for consumers. The standard building agreement will probably be reviewed.

I recommend everybody read this report published in November 2008:

National Consumer Agency - The Home Construction Industry and the Consumer in Ireland - Volume 4. This is a review of insurance issues.

The recommendations put forward are excellent - plain to read and understand for anyone. In the context of my contract I can easily see how it applies - and can be used as a guide for the future. One point mentioned is that any deposits paid to a developer will not be covered by Homebond Insurance - if these payments are paid before the house/apartment/duplex is registered with Homebond by the builder. This report highlights this as a risk to consumers and is termed a risk of under insurance I think. I am uncertain at the moment if Laragan Developments Ltd did register the apartments and duplexes at Milners Square with Homebond - before taking deposits from buyers.
 
IMO Its not the solictors remit to give you professional investment, or financial advice, regarding buying off the plans or in property investment in general. However I would expect them to give advice if the contract is weak or has legal pitfalls. Its a complete cop out to say the buck stops with the client if some legal aspect is missed. Thats making a strong case for not using a solictor at all. Just because someone won't act on advice given. Doesn't mean you shouldn't give that advice. Or that theres a professional obligation even if theres no legal obligation to do so.

I think most people in this thread are aware that the current process is deeply flawed. Its disappointing that its the National Consumer Agency that has to point this out, instead of the "professional" bodies involved.
 
It's certainly not a solicitor's remit to give investment or financial advice. A solicitor steps in when the decision to buy property has been made by the purchaser. The solicitor then deals with the legal aspects of the property and raises any issues that they need to. If there is a problem with the property it is brought to the attention of the buyer.

I have on occassion informed people of the time frame for completion and that the Building Agreement is in the builder's favour and usually they are not interested or tell you that the estate agent told them the property would be ready in a couple of months. I explain Homebond is limited protection with time limits but again so long as people hear "Homebond" after that they lose interest.

To compare I know people who will take their car to the garage who take no interest in what the mechanic tells them about their car or what has to be done to it.
 
Ummm, considering the poor rep of the car industry, servicing, cartels, overharging etc, analogies may have different interpretations than intended.
Perhaps this is an analogy too far. But is it reasonable that a client be responsible for something a mechanic missed considering the clients lack of mechanical or technical knowledge? Contracts are rarely simple.
 
I think the only real issue for solicitors is the matter of the time limit on Homebond.

Everything else, is down to the headlong rush to get on the property ladder at all costs, the inherent issues/risks of buying off plans and dealing with limited liability companies , the global recession and the massive slump in property prices.

So - are solicitors responsible for their clients' woes ? Should they be held responsible for the loss of the deposit? Would a Court find that if a Solicitor had failed to point out all the risks of buying off plans, dealing with limited companies, and the fact that property prices could slump, and if the clients truly, truly, hand on heart say that if they'd known all this and even at the height of the frenzy, they would deffo not have gone ahead - would a Court find that the solicitor should pay up for their lost deposits?

Or will the Court say : are you not relieved not to be stuck in a seriously devalued property? And you are actually in a nett gain situation?

So, I think we're back to the issue of smarting over the loss of the money and wanting the butter on both sides of the bread.

And maybe, maybe, we will see a major sea change in the way that buying off the plans operates. It is risky - for the purchaser, if it all goes pear shaped and for the developer, if the purchaser wants or needs out. I cannot see a bank being willing to fund a development unless there are purchasers contracted to buy.


mf
 
mf1 said:
...Or will the Court say : are you not relieved not to be stuck in a seriously devalued property? And you are actually in a nett gain situation?

So, I think we're back to the issue of smarting over the loss of the money and wanting the butter on both sides of the bread. ...
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+1

I hope theres a sea of change. I'm not expecting one.
 
Hi Mf1 -

Today the Scheme of Arrangement is being decided upon by Justice Clarke at the 4 Courts. So it will be interesting to see what comments or recommendations that may be made by the Judge. And as you say will the Court say : are you not relieved not to be stuck in a seriously devalued property? And you are actually in a nett gain situation?

I am now beginning to think that Homebond may not protect deposits - the National Consumer Agency published in November 2008 a publication regarding Insurance Issues relating to purchases of property. Regarding deposits, it says that any deposit paid to a builder for property purchased will not be protected if this payments is paid before the property is registered by the builder with Homebond.

I am not certain of the implications of this - for example if a builder who is starting to build a 300 house development - will he register all 300 houses/apartments with Homebond before he starts to sell these properties and before he starts to accept deposit payments from buyers? - if he does not then any deposit paid by any buyers will not be protected! This is how I read the situation now.
 
Don't want to drag this off topic but TBH before this thread I was not aware that the Homebond protected deposits at all. Even in the limited scope that it appears to. I'm sure the vast majority of people don't. TBH the homebond covers very little other than structural issues. There is a need for some other cover for poor workmanship and other problems that are not structural. Seems strange you can return low value consumer goods but you can have major problems with a house and have no cover what so ever as a consumer.
 
"I am not certain of the implications of this - for example if a builder who is starting to build a 300 house development - will he register all 300 houses/apartments with Homebond before he starts to sell these properties and before he starts to accept deposit payments from buyers? - if he does not then any deposit paid by any buyers will not be protected! This is how I read the situation now."

If I understand you correctly, you are asking if (a) booking deposits and (b) contract deposits were protected by Homebond. As I understand it, unless the properties were registered with Homebond ( and that is one thing the solicitors did always check), nothing was ever protected. If the property was registered with Homebond, then the deposit was protected - subject to the time limit and also to a monetary limit for each developer. I understand that this particular developer would not have had sufficient cover for all the deposits.

mf
 
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Thanks MF1 for reply -

The Homebond issue was discussed yesterday and importantly it was pointed out that the Homebond Scheme would not have covered the amount of deposits owed. The Homebond Scheme has a limit of just over €0.5m, whereas the deposits in this case amount to €1.44m.
 
According to the Irish Independent today the Court has decided the Depositors can buy the properties at current market value.
 
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