Withdrawing from legal contract to buy house

Ulster9 · 13-06-2007 2:43pm #1

Does anyone know of examples where people have pulled out of a contract to buy a house and the builder has sued.Is this a course of action that the builder regularly goes down.
My own opinion is that worse case scenario is that you loose the deposit and the builder returns the house to the market.This may be naive.I just dont see a builder bringing a first-time buyer for example to court to recover costs from somebody who claims they cannot go through with the purchase due to increased interest-rates for example.Just wondering what generally happens in these cases from people in the know?

jubi lee · 13-06-2007 3:06pm

if you have exchanged contracts then he is within is rights to sue as you have broken a written contract. in the current housing markets, buyers are harder to come by so finiding a buyer may not be as easy for the builder.

Ulster9 · 13-06-2007 3:23pm

jubi lee wrote:

if you have exchanged contracts then he is within is rights to sue as you have broken a written contract. in the current housing markets, buyers are harder to come by so finiding a buyer may not be as easy for the builder.

Yes i agree he is entitled to sue for losses but would it be worth his while.There are many cases were people are entitled to sue but decide not to on the basis that you cant pull feathers from a frog, if you know what i mean.

Akrasia · 13-06-2007 3:24pm

What about if the Builder has broken a part of his agreement by lets say, being 7 months late completing the house?

jubi lee · 13-06-2007 3:25pm

it depends on whther he has potential buyers for the house. if not or it is proving difficult to sell on any other properties, he might be prepared to sue. however it might also be scare tactics. how far into the process are you?

jubi lee · 13-06-2007 3:29pm

Akrasia wrote:

What about if the Builder has broken a part of his agreement by lets say, being 7 months late completing the house?

Was there a firm completion date written into the contract you signed? i don't think there normally is... which means they haven't broken anayhting other than being totally incompetent. and we all know houses are never ready when they are meant to be...

Ulster9 · 13-06-2007 3:37pm

jubi lee wrote:

it depends on whther he has potential buyers for the house. if not or it is proving difficult to sell on any other properties, he might be prepared to sue. however it might also be scare tactics. how far into the process are you?

Am considering withdrawing on the basis that the house was supposed to be ready in Febraury and it looks like being August.The market has changed and the house is now grossly overvalued in my view.The builder is probably not at all in the wrong and would in all fairness be entitled to sue but this is business and we all try to cut our losses.I suppose we all take risks.In the end i think if we do decide to pull out for our own interests then he may well keep the deposit( fair enough) but i would see any threat of legal action as hot air although would not be surprised at developers persuing property investors who pull the plug on a number of purchases in the same development.

jubi lee · 13-06-2007 3:42pm

i really don't think that time frame would be that much out of the ordinary. my first house was 4-5 months late.

have a read of your contract... see what it says about either party pulling out.you will lose at least any money you have paid them so far.. 10% of the property value?

if you go and buy another new house, you'll just be starting the process again...and that will also prob be delayed.

it may be overvalued now... not the builders fault...

patrickolee · 13-06-2007 3:48pm

If the prices had gone up you would have been making money on securing the apartment at a lower price. That was the reward. As it happens, prices have gone down slightly? That was the risk.

It's tough to face up to, but the builder can keep your deposit at the very least. Probably best to check your contract and get some legal advice. You might be better off just ploughing ahead with the purchase.

Ulster9 · 13-06-2007 4:14pm

patrickolee wrote:

If the prices had gone up you would have been making money on securing the apartment at a lower price. That was the reward. As it happens, prices have gone down slightly? That was the risk.

It's tough to face up to, but the builder can keep your deposit at the very least. Probably best to check your contract and get some legal advice. You might be better off just ploughing ahead with the purchase.

Plough ahead and loose your first-time buyer status with a home that is 50k overvalued and yet to be furnished.That would be reckless.

patrickolee · 13-06-2007 4:22pm

Depends whats in the contract... who knows what he'll lose. Best get legal advice before you do anything.

Ulster9 · 13-06-2007 4:24pm

patrickolee wrote:

Depends whats in the contract... who knows what he'll lose. Best get legal advice before you do anything.

Certainly will thanks for comments

BlackIguana · 14-06-2007 3:04pm

Ulster9 wrote:

Plough ahead and loose your first-time buyer status with a home that is 50k overvalued and yet to be furnished.That would be reckless.

In my opinion your thinking is spot on here. I would TRY HARD to wriggle out of it if I was in your position. The FTB status is valuable plus you really don't want to be in a negative equity situation now. There are no rewards for being nice in this game...

I would do this. Think of all the possible reasons you are pulling out (not price). Eg completed late, verbal assurances the builder broke etc etc. Play hardball - say you want your deposit back or you'll take HIM to court...

Be intransigent. Then hint verbally (don't write it down) that if he can sharpen his pencil on the price then you'll go ahead with it. I'm presuming that if he takes 50k off the price you'll take it? That way you won't lose your deposit & presumably you liked the place enough to buy it.

Just when he thinks you have a deal say you also want the extras that he is now offering on the other houses (place tiled, fitten kitchen etc).

You're in a bad position legally but he don't want to take a FTB with shallow pockets to court. Use stubborness and a brass neck to get yourself a good deal...

The above is not legal advice. If you get legal advice I expect that they'll tell you that you are legally obliged to proceed at the agreed price..........

Remember the quote....

The meek shall inherit the earth, but not the mineral rights.
John Paul Getty

Zambia · 14-06-2007 3:38pm

Ulster9 wrote:

Certainly will thanks for comments

I assume this house is southern ?

Well I had a builder pull a house on me before contracts and return my deposit as the market was soaring and the house would be worth more by completion.

I would say that interest rate hikes have cut your mortgage and you cant buy the house...and request that he returns your deposit and apologise for any trouble. chances are he will let you walk

Ulster9 · 14-06-2007 4:03pm

Thanks Zambia and BlackIguana, i think you have the finger on the pulse here.Its a difficult choice here but i think if needs be i wont be afraid to tare up the contract.The market is very unsteady now with second hand homes becoming more affordable.BlackIguana i like your way of thinking,i think this is the way to go to get out of the contract.

godtabh · 14-06-2007 4:42pm

I'm persuing my builder for intrest because he was 5 months late with my aparement.

What I'm entitles to is very small.

My solicitor mentioned that I at them I could issue a formal request to close (as the builder did with me when the snag letter was sent out) he has 2 weeks to close after that date to close. If he doesnt you can tear up the contract legally and lose nothing.

Ask you solicitor about it. DOnt know what its called

Withdrawing from legal contract to buy house

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