Could save money on contract mistake.

Lord Nikon

A colleague of mine has recently put a deposit down on a house, and is in the process of moving in after the snags. Anyway, when he signed the contract for the house which includes the land it's on and the house it is significantly less than the actual price.
His solicitor said that once he signed the contract and the builder signed the contract, that the builder would have to sell it at that price and that it was a binding contract.

According to his solicitor, the cards are in his favour, legally. But could it backfire and cause more trouble than it's worth. Also, it would make a big difference to his monthly mortgage repayments.

antoinolachtnai

Hang on. Has the builder signed yet or not?

He can't be moving in if everything isn't done and dusted.

Has he taken possession of the house? So what's the problem then?

How could it backfire? The builder isn't going to like it, but what can he do? If the builder is a big operator, he might never even notice. If he signs, then doesn't fulfill the contract, you get a court order. It comes down to whether the difference in price is worth the potential hassle for your friend.

On the other hand, maybe there is a moral issue for your friend and that is fair enough. We all have to decide what we want to do.

Lord Nikon

The builder has signed, just not the contract when the keys are handed over.

The builder has noticed and has contacted the solicitor about it. I assume they are expected my mate to pay the original price.

I think it's mostly a moral issue, but his partner is happy to take the discounted price and it's tough crap for the builder.

My mates solicitor has suggested that he pays the agreed original price, as he is sure that if he a mistake in favour of the builder, the builder would change the price to the agreed price so the customer would be happy.

STaN

i believe in karma.. if they rip him off for a mistake .. something bad might happen the house who knows

antoinolachtnai

So what is the builder planning on doing about it? Has he written to your friend and asked for the mistake to be rectified?

There is no way your friend should pay over more than is specified in the contract. That would potentially be tax fraud (because the proper stamp would not be paid).

I would just ignore the whole issue and be ready to close on the appointed date. If he won't close, then thngs get interesting. It basically depends how hard the builder is and how hard your friend and his solicitor are. If the solicitor isn't up for a fight, but he is, then he should find one who is. Litigation is not to be taken lightly though. It might make sense to split the difference and not go to court. Of course you should have good legal advice before contemplating anything that will involve going to court.

The least the developer could do is get in touch directly and apologise.

It is quite possible it is the solicitor on the other side who has made the mistake here, rather than the developer. If the builder is short-changed, I would say the other side's solicitor is going to be asked to make up the difference. This sounds cynical, but it isn't surprising that your friend's solicitor is trying to dig the other solicitor out of a hole. It's basically tough luck. If he didn't like the contract, why did he sign it?


This talk about being sure that if the mistake were the other way the builder would change the price is just tosh. It just wouldn't happen. A purchaser would never sign on a higher than accepted price on a house contract. It's the first thing the purchaser checks. (It should be the first thing a vendor checks too.)

Lord Nikon

STaN wrote:

i believe in karma.. if they rip him off for a mistake .. something bad might happen the house who knows

Property is overpriced anyway and I'm sure the builder is making money from each and every house, but I see where you are coming from.

Lord Nikon

antoinolachtnai wrote:

So what is the builder planning on doing about it? Has he written to your friend and asked for the mistake to be rectified?

He has not written to my friend about it. Infact it looks like the builder is letting him make the move to correct the situation.

antoinolachtnai wrote:

There is no way your friend should pay over more than is specified in the contract. That would potentially be tax fraud (because the proper stamp would not be paid).

Well, there was the deposit he paid which specified the original house price. No Stamp Duty, first time buyer.

antoinolachtnai wrote:

I would just ignore the whole issue and ask when the house is going to be ready to move in and when he will close. If he won't close, then things get interesting. It basically depends how hard the builder is and how hard your friend and his solicitor are. If the solicitor isn't up for a fight, but he is, then he should find one who is. Litigation is not to be taken lightly though. It might make sense to split the difference and not go to court.

Well, as far as I'm aware, snagging is still happening, and the builders are rectifying the snags.

antoinolachtnai wrote:

This talk about being sure that if the mistake were the other way the builder would change the price is just tosh. It just wouldn't happen. A purchaser would never sign on a higher than accepted price on a house contract. It's the first thing the purchaser checks.

This is true, and the solicitor would point out such a mistake, and it would never be signed buy the purchaser.

The bottom line is that, once a contract of any description, including one for the sale of land, is signed, it's almost impossible to get out of it. Your friend would have a very strong case, at face value anyway. Setting morals to one side, as a matter of legal practice would imagine the Solicitor for the Purchaser should simply hand over the balance moneys as per the contract and threaten to go for specific performance of the contract when they kick up a fuss. Hard to see how they can get out of it. Certainly wuold expect the Solicitor to at least raise the issue and see what reaction it provokes, wouldn't fold at this stage at all.

Lord Nikon

Thanks for the replies, I've mailed some to my mate. Anymore comments are welcome.

the_batman

Was your friend aware of the mistake in the contract when he signed it?

Victor

neuromancer wrote:

The builder has signed, just not the contract when the keys are handed over.

If the builder has signed the contract and your friend (or his solicitor) has a signed copy, then there is very little the builder can do.

I'm not sure if the builder can claim a mistake in the contract as a remedy. He might however hold the site hostage. :eek:

wyndham

What's are the monetary amounts in question? ie, As a percentage of the purchase price?

Lord Nikon

the_batman wrote:

Was your friend aware of the mistake in the contract when he signed it?

Yes, and send it to the developer for signing, which they did. They didn't spot the mistake till a few weeks after.

Lord Nikon

Victor wrote:

If the builder has signed the contract and your friend (or his solicitor) has a signed copy, then there is very little the builder can do.

I'm not sure if the builder can claim a mistake in the contract as a remedy. He might however hold the site hostage. :eek:

i can see what your saying, the builder can reject to selling the house at the lower price, until a figure is agreed.

My mates solicitor said that if he fought it out, it could take a while, months/years.

Lord Nikon

wyndham wrote:

What's are the monetary amounts in question? ie, As a percentage of the purchase price?

over 6%

antoinolachtnai

neuromancer wrote:

i can see what your saying, the builder can reject to selling the house at the lower price, until a figure is agreed.

My mates solicitor said that if he fought it out, it could take a while, months/years.

This would be breaching the contract.

It's all down to how hard your friend is and whether he has a bit of time to spare. If he has the bottle, the builder will probably back down. Losing this case would be massively expensive and embarassing for the builder. On the other hand, the builder isn't going to make it easy and there are definitely risks.

Personally I would have a go, but your friend has to decide for himself.