House sale contract signed

blowin3

Myself and my brother are selling a house and have a contract signed by both parties. Can the people buying the house back out because of whats happening at the moment. I know they were loan approved etc and the closing date is 3 weeks.
Thanks for your help

partyguinness

Well they can decide not to proceed but they will lose their deposit at a minimum.

This coronavirus is not grounds to set aside the contract. Legally they are obliged to complete.

fliball123

blowin3 wrote: »

Myself and my brother are selling a house and have a contract signed by both parties. Can the people buying the house back out because of whats happening at the moment. I know they were loan approved etc and the closing date is 3 weeks.
Thanks for your help

They may be close to their loan offer lapsing and then have to reapply and just tell the bank one of their jobs or both jobs are no longer secure in the current climate. Most solicitors will put a clause in that it goes through under the provision of getting the mortgage so there is still a way out for them

kevinc565

partyguinness wrote: »

Well they can decide not to proceed but they will lose their deposit at a minimum.

This coronavirus is not grounds to set aside the contract. Legally they are obliged to complete.

It's outlined here. British law , but same principles here I would think.

https://www.russell-cooke.co.uk/failuretocompletepurchase/

fliball123

So did you ask for a discount?

ELM327

fliball123 wrote: »

They may be close to their loan offer lapsing and then have to reapply and just tell the bank one of their jobs or both jobs are no longer secure in the current climate. Most solicitors will put a clause in that it goes through under the provision of getting the mortgage so there is still a way out for them

Thats an interesting if nefarious "out"

fliball123

ELM327 wrote: »

Thats an interesting if nefarious "out"

How is it nefarious are you saying that we are not living in unprecedented times and unless you have a public sector job, your job is at risk and would it not be prudent to tell the bank this if you have to reapply for your mortgage.

ELM327

It's nefarious if you use it without grounds.
Many people (especially those buying houses) will not be affected by this.
Of course, some industries (esp non essential retail, travel etc) will be affected

fliball123

ELM327 wrote: »

It's nefarious if you use it without grounds.
Many people (especially those buying houses) will not be affected by this.
Of course, some industries (esp non essential retail, travel etc) will be affected

Already 350k people are affected as in they lost their jobs. Anyone in the private sector in now not as secure as it was. So there is grounds for anyone working in the private sector nothing nefarious to tell the bank that your job is no long secure. In fact it would be a silly idea to proceed if you had this option

listermint

ELM327 wrote: »

It's nefarious if you use it without grounds.
Many people (especially those buying houses) will not be affected by this.
Of course, some industries (esp non essential retail, travel etc) will be affected

On what basis did you make that assertion

ELM327

The amount of people who are continuing to work as normal, but from home.
It's like the '08 downturn. Some jobs were unstable and some were less so, based on the type of work. Retail workers in Tesco, Lidl etc are not going to lose their jobs because of this. Someone who is a flight attendant or runs an OTA for instance, would be a lot more likely to be affected.

Some professions (risk analysis, data modelling and data science, retail demand modelling, perhaps stock market related etc) may actually gain in numbers due to this. We're stepping up hiring experienced credit risk folks due to this crisis, for instance.

fliball123

ELM327 wrote: »

The amount of people who are continuing to work as normal, but from home.
It's like the '08 downturn. Some jobs were unstable and some were less so, based on the type of work. Retail workers in Tesco, Lidl etc are not going to lose their jobs because of this. Someone who is a flight attendant or runs an OTA for instance, would be a lot more likely to be affected.

Some professions (risk analysis, data modelling and data science, retail demand modelling, perhaps stock market related etc) may actually gain in numbers due to this. We're stepping up hiring experienced credit risk folks due to this crisis, for instance.

AND?? So tell me what has that got to do with a single transaction that in law was signed under the provision that the buyer gets approved for a mortgage and with the current pandemic going on which could last anywhere up to 2 years a large majority of workers will have either no job, or a cut in wage for doing the job or a job that is no longer secure as it was. Do you not think it is prudent to tell the bank this information when reapplying for the mortgage or do you think they should just lie to the bank and get mortgage and hope that their job stays in tact with out losing or a paycut in the next 2 years.

ELM327

fliball123 wrote: »

AND?? So tell me what has that got to do with a single transaction that in law was signed under the provision that the buyer gets approved for a mortgage and with the current pandemic going on which could last anywhere up to 2 years a large majority of workers will have either no job, or a cut in wage for doing the job or a job that is no longer secure as it was. Do you not think it is prudent to tell the bank this information when reapplying for the mortgage or do you think they should just lie to the bank and get mortgage and hope that their job stays in tact with out losing or a paycut in the next 2 years.

I think they are under no obligation to do either. Certainly no one needs to lie to the bank.

If they are approved then they are approved and if the banks underwriters are happy to continue in the current climate then I don't see why you need to "tell the bank" anything. I'm sure the bank are all aware of the current pandemic!

fliball123

ELM327 wrote: »

I think they are under no obligation to do either. Certainly no one needs to lie to the bank.

If they are approved then they are approved and if the banks underwriters are happy to continue in the current climate then I don't see why you need to "tell the bank" anything. I'm sure the bank are all aware of the current pandemic!

So don't bring up the fact that your job is no longer as secure as it once was anyway we arguing over something else.

The OP was asking if the buyer could get out of the deal after the contracts were signed and I simply highlighted an out where if the buyer was close to their loan offer expiring they could let it expire and reapply and tell the bank that their job was no longer secure and basically ensure no mortgage approval and that most solicitors insist that you put in a "on the provision of getting mortgage approval" clause which may trump any contract.

listermint

ELM327 wrote: »

The amount of people who are continuing to work as normal, but from home.
It's like the '08 downturn. Some jobs were unstable and some were less so, based on the type of work. Retail workers in Tesco, Lidl etc are not going to lose their jobs because of this. Someone who is a flight attendant or runs an OTA for instance, would be a lot more likely to be affected.

Some professions (risk analysis, data modelling and data science, retail demand modelling, perhaps stock market related etc) may actually gain in numbers due to this. We're stepping up hiring experienced credit risk folks due to this crisis, for instance.

Im working from home, there is nothing to say our US market (our biggest one) wont get pulled from under us. There is too much stock in 'professions' job. Nothing in life is infallible tbh. So id urge people to consider that.

There is new normals being set here. And 2008 has no reference to it frankly.

Claw Hammer

kevinc565 wrote: »

It's outlined here. British law , but same principles here I would think.

https://www.russell-cooke.co.uk/failuretocompletepurchase/

This is not Britain. This is ireland with different laws.

kevinc565

fliball123 wrote: »

So don't bring up the fact that your job is no longer as secure as it once was anyway we arguing over something else.

The OP was asking if the buyer could get out of the deal after the contracts were signed and I simply highlighted an out where if the buyer was close to their loan offer expiring they could let it expire and reapply and tell the bank that their job was no longer secure and basically ensure no mortgage approval and that most solicitors insist that you put in a "on the provision of getting mortgage approval" clause which may trump any contract.

Approval in Principle (AIP)
Choose house
Loan Offer
Sign contracts
Mortgage drawdown
Completion

All different.

Larbre34

They'd be mad NOT to pull out. Any loss of deposit would be more than compensated for by the expected 20% average drop in market prices, when they return after the crisis. If, of course, they retain their employment and by extension their financing etc.

Sorry dude.

kevinc565

I know, that's why i caveated it by stating it was a British page.

the same principles apply here.

basically, you don't automatically forfeit the deposit. you only forfeit what you've lost buy the buyer pulling out. if you lose nothing eg new buyer appears and buys for same price then all you've lost is some legal fees.

However that's unlikely, so what tends to happen is the seller drops the price ( has a loss) and send for a price roughy €x below the old asking price as he will still achieve the same overall price.

the other option is to sue the buyer to complete the sale, but if he doesn't have cash it's a waste of time.

To prevent endless comments picking holes in what I've said I chose to post a link to a more verbose article.

this is not legal advice. please consult a solicitor or legal professional.

Claw Hammer

kevinc565 wrote: »

I know, that's why i caveated it by stating it was a British page.

the same principles apply here.

basically, you don't automatically forfeit the deposit. you only forfeit what you've lost buy the buyer pulling out. if you lose nothing eg new buyer appears and buys for same price then all you've lost is some legal fees.

However that's unlikely, so what tends to happen is the seller drops the price ( has a loss) and send for a price roughy €x below the old asking price as he will still achieve the same overall price.

the other option is to sue the buyer to complete the sale, but if he doesn't have cash it's a waste of time.

To prevent endless comments picking holes in what I've said I chose to post a link to a more verbose article.

The deposit goes if the buyer pulls out at a minimum. The 1925 Law of Property Act does no apply in Ireland and never did. Loss of a purchase deposit is an exception to the rule about mitigating loss. There may be some wriggle room if the property is subject to loan or there is a technical issue such as planning which can be used.

Graham

Mod

1) OP Talk to Your Solicitor
2) UK Law Does not apply here even if there may be similarities.
3) Please don't give legal advice as per Boards.ie rules.

kevinc565

Graham wrote: »

Mod

1) OP Talk to Your Solicitor
2) UK Law Does not apply here even if there may be similarities.
3) Please don't give legal advice as per Boards.ie rules.

not giving legal advice, have no legal background. just posting a link to give my thoughts to a question.

i know british law does't apply in ireland. i thought that was obvious. Hence the statement "British law , but same principles here I would think."

kevinc565

Claw Hammer wrote: »

The deposit goes if the buyer pulls out at a minimum. The 1925 Law of Property Act does no apply in Ireland and never did. Loss of a purchase deposit is an exception to the rule about mitigating loss. There may be some wriggle room if the property is subject to loan or there is a technical issue such as planning which can be used.

i'm not so sure. the standard conditions which irish solicitors generally use appear to state otherwise.

eg

If the Purchaser shall fail in any material respect to comply with any of the Conditions, the Vendor
(without prejudice to any rights or remedies available to him at law or in equity) shall be entitled to
forfeit the deposit and to such purpose unilaterally to direct his solicitor or other stakeholder to release
same to him AND the Vendor shall be at liberty (without being obliged to tender an Assurance) to
resell the Subject Property, with or without notice to the Purchaser, either by public auction or private
treaty. In the event of the Vendor re-selling the Subject Property within one year after the Closing Date
(or within one year computed from the expiration of any period by which the closing may have been
extended pursuant to General Condition 36) the deficiency (if any) arising on such re-sale and all costs
and expenses attending the same or on any attempted re-sale shall (without prejudice to such damages to
which the Vendor shall otherwise be entitled) be made good to the Vendor by the Purchaser, who shall be
allowed credit against same for the deposit so forfeited. Any increase in price obtained by the Vendor on
any sale, whenever effected, shall belong to the Vendor.

Source: https://www.lawsociety.ie/globalassets/documents/committees/conveyancing/precedents/2019/2019-conditions-of-sale.pdf


this is not legal advice, just a reprint and link of a website.
please consult a solicitor.

wirelessdude01

fliball123 wrote: »

So don't bring up the fact that your job is no longer as secure as it once was anyway we arguing over something else.

The OP was asking if the buyer could get out of the deal after the contracts were signed and I simply highlighted an out where if the buyer was close to their loan offer expiring they could let it expire and reapply and tell the bank that their job was no longer secure and basically ensure no mortgage approval and that most solicitors insist that you put in a "on the provision of getting mortgage approval" clause which may trump any contract.

In a case like this would you lose whatever deposit you have paid?

fliball123

wirelessdude01 wrote: »

In a case like this would you lose whatever deposit you have paid?

no you wouldn't any solicitor worth his salt will put a clause in stating that the sale is on the basis of mortgage approval. So if the buyer cant get it the contract is null and void due to the clause. As I say it would only be the case if the buyer was close to their original mortgage approval expiring, If it expires the mortgage process has to start all over again

Claw Hammer

kevinc565 wrote: »

i'm not so sure. the standard conditions which irish solicitors generally use appear to state otherwise.

eg

If the Purchaser shall fail in any material respect to comply with any of the Conditions, the Vendor
(without prejudice to any rights or remedies available to him at law or in equity) shall be entitled to
forfeit the deposit and to such purpose unilaterally to direct his solicitor or other stakeholder to release
same to him AND the Vendor shall be at liberty (without being obliged to tender an Assurance) to
resell the Subject Property, with or without notice to the Purchaser, either by public auction or private
treaty. In the event of the Vendor re-selling the Subject Property within one year after the Closing Date
(or within one year computed from the expiration of any period by which the closing may have been
extended pursuant to General Condition 36) the deficiency (if any) arising on such re-sale and all costs
and expenses attending the same or on any attempted re-sale shall (without prejudice to such damages to
which the Vendor shall otherwise be entitled) be made good to the Vendor by the Purchaser, who shall be
allowed credit against same for the deposit so forfeited. Any increase in price obtained by the Vendor on
any sale, whenever effected, shall belong to the Vendor.

Source: https://www.lawsociety.ie/globalassets/documents/committees/conveyancing/precedents/2019/2019-conditions-of-sale.pdf


this is not legal advice, just a reprint and link of a website.
please consult a solicitor.

If you understood it, it means the deposit is gone at a minimum. Irish conveyancing law and British are very different and it is dangerous to assume the same principles apply.

Graham

fliball123 wrote: »

no you wouldn't any solicitor worth his salt will put a clause in stating that the sale is on the basis of mortgage approval. So if the buyer cant get it the contract is null and void due to the clause.

Plenty of recent new builds where the vendor wouldn't accept such a clause.

fliball123

Graham wrote: »

Plenty of recent new builds where the vendor wouldn't accept such a clause.

I think anyone solicitor who is buying for a cilent and signed to buy a house and be at the mercy of the bank as in even if they give loan approval they could renege on giving the loan. For example say a bank was going under and had given mortgage approval and could no longer give the mortgage what happens? There is no way any solicitor worth there salt would leave a client open to such an outcome even if it is unlikely to happen. but isnt that what solicitors are for?

Claw Hammer

fliball123 wrote: »

I think anyone solicitor who is buying for a cilent and signed to buy a house and be at the mercy of the bank as in even if they give loan approval they could renege on giving the loan. For example say a bank was going under and had given mortgage approval and could no longer give the mortgage what happens? There is no way any solicitor worth there salt would leave a client open to such an outcome even if it is unlikely to happen. but isnt that what solicitors are for?

The solicitor can only advise the client as to the consequences of signing. They cannot force the Vendor to accept such a clause.

fliball123

Claw Hammer wrote: »

The solicitor can only advise the client as to the consequences of signing. They cannot force the Vendor to accept such a clause.

That is true but you can be damn sure the solicitor for the buyer will include it from the sellers side thy automatically just accept that the buyer has mortgage approval and there wont be an issue..its a grey area

Graham

There's no grey area.

If a vendor refuses to accept such a clause it is up to the purchaser whether they wish to proceed or not after considering the inevitable warning about the risks from their own solicitor.

Claw Hammer

fliball123 wrote: »

That is true but you can be damn sure the solicitor for the buyer will include it from the sellers side thy automatically just accept that the buyer has mortgage approval and there wont be an issue..its a grey area

There is no grey area. If the vendor doesn't want he can say that he doesn't want it and is under no obligation to accept. If he signs the contract with it he can be shafted. If he refuses to sign with the loan approval clause in it either the buyer signs and takes the risk or the vendor finds another buyer.

blowin3

Thanks all for your input. I have been busy working on frontline services its bed to work etc.

It seems that the sale is going trough ( we have hear noting negative coming from the other is when they signed the contract loan approval had been granted and both sides have signed. But like everything anything can happen 3 weeks ago would any of us have gussed the world would be turned upside down.

Cyrus

Larbre34 wrote: »

They'd be mad NOT to pull out. Any loss of deposit would be more than compensated for by the expected 20% average drop in market prices, when they return after the crisis. If, of course, they retain their employment and by extension their financing etc.

Sorry dude.

The expected 20 percent price drop ?

Expected by who ? Why 20. %?

kevinc565

Claw Hammer wrote: »

If you understood it, it means the deposit is gone at a minimum. Irish conveyancing law and British are very different and it is dangerous to assume the same principles apply.

1) I am not making an assumption that they are the same. I'm suggesting that they could be in this case ( "I would think").

2) the above means you only lose your full deposit where a) the vendor doesn't sell in a year after the original sale falls through or b) the vendor sells for the original agreed price less your deposit plus his costs.
.

Clearly in reality the vendor will act to maximise his own utility, so the deposit is as good as gone however in a rising market (not now) there would be a chance of deposit recovery. To suggest that the 100% of deposit is 100% gone is not true.

Graham

kevinc565 wrote: »

To suggest that the 100% of deposit is 100% gone is not true.

Your earlier quote from the law society appears to suggests otherwise.

The deposit is forfeit.

Claw Hammer

kevinc565 wrote: »

1) I am not making an assumption that they are the same. I'm suggesting that they could be in this case ( "I would think").

2) the above means you only lose your full deposit where a) the vendor doesn't sell in a year after the original sale falls through or b) the vendor sells for the original agreed price less your deposit plus his costs.
.

Clearly in reality the vendor will act to maximise his own utility, so the deposit is as good as gone however in a rising market (not now) there would be a chance of deposit recovery. To suggest that the 100% of deposit is 100% gone is not true.

Suggesting you think something could be the same and using weasel phrase like "I would think" is either suggesting you have some basis or knowledge for your proposition or else simply to cover yourself when your rubbish is exposed for the nonsense that it is.

What the clause means is that if the Vendor sell at a loss and incurs additional costs they come from the deposit first, if the vendor makes a profit, he keeps it, and the deposit.

the_syco

Larbre34 wrote: »

They'd be mad NOT to pull out. Any loss of deposit would be more than compensated for by the expected 20% average drop in market prices, when they return after the crisis. If, of course, they retain their employment and by extension their financing etc.

Unless they're Civil Servants, their jobs are not guaranteed. Also, when prices drop due to unemployment, lending rules could get stricter.

kevinc565

Claw Hammer wrote: »

Suggesting you think something could be the same and using weasel phrase like "I would think" is either suggesting you have some basis or knowledge for your proposition or else simply to cover yourself when your rubbish is exposed for the nonsense that it is.

What the clause means is that if the Vendor sell at a loss and incurs additional costs they come from the deposit first, if the vendor makes a profit, he keeps it, and the deposit.

Why are you so aggressive?

Stating that principles of irish law may be similar to british law is not rubbish. most of our law was inherited from them. I cleared stated it was a british legal source, and people should be intelligent enough to draw their own conclusions from that. eg british legal source, could be similar but may not be. always best to check.

following link is about employment law but in the opening paragraphs states that Irish and British law are highly similar. Pedant note: hugely similar does not mean identical.

https://employmentrightsireland.com/irish-and-uk-employment-law-what-are-the-main-differences/

I might be wrong on the deposit, probably am!

StoptheClocks

I sold a house in February. It was sale agreed in December and empty for over a month.
When the purchaser was ready to sign they asked for a clause to be added that if the bank refused them from drawing down on their mortgage that I would refund their deposit. My solicitor told me that this is becoming standard practise and it's something she insists on herself.
It would only cover the bank pulling the plug on the purchaser, not them changing their minds. It was concerning for me at the time.
Your solicitor should outline this to you.

kevinc565

StoptheClocks wrote: »

I sold a house in February. It was sale agreed in December and empty for over a month.
When the purchaser was ready to sign they asked for a clause to be added that if the bank refused them from drawing down on their mortgage that I would refund their deposit. My solicitor told me that this is becoming standard practise and it's something she insists on herself.
It would only cover the bank pulling the plug on the purchaser, not them changing their minds. It was concerning for me at the time.
Your solicitor should outline this to you.

Interesting. Plenty of buyers would like a term like that in contracts fro sale. Venders not so much!. Give and take = hence a market.

If it's becoming practise then good for buyers as always a risk bank may decide not to play ball , however small, after contracts have been signed leavign the buyer in a messy position.

Claw Hammer

kevinc565 wrote: »

Why are you so aggressive?

Stating that principles of irish law may be similar to british law is not rubbish. most of our law was inherited from them. I cleared stated it was a british legal source, and people should be intelligent enough to draw their own conclusions from that. eg british legal source, could be similar but may not be. always best to check.

following link is about employment law but in the opening paragraphs states that Irish and British law are highly similar. Pedant note: hugely similar does not mean identical.

https://employmentrightsireland.com/irish-and-uk-employment-law-what-are-the-main-differences/

I might be wrong on the deposit, probably am!

why are you so stubborn? Irish law and British law may derive from the common law but that is far from saying that you can apply British law to any Irish situation. An intelligent person would actually check themselves before posting rather than leave it to the reader to work out for themselves.
You are now trying to extrapolate from employment law to land law. This is clearly in attempt to support your hypothesis that Irish and British law are similar and therefore one can safely look at the situation, see what would happen in a British context and applied to Ireland.
Employment law is a particularly bad example to give in this context. Most employment law in either jurisdiction is derived from European directives which have as their object achieving the same effect in all the member states of the European Union. The situation is radically different with regard to land law. Irish and British landlord have differed significantly since the 18th century. Unless you know what the differences are, you simply can't look at British law and apply it to an Irish situation.

You are of course wrong about the deposit.

Donald Trump

StoptheClocks wrote: »

I sold a house in February. It was sale agreed in December and empty for over a month.
When the purchaser was ready to sign they asked for a clause to be added that if the bank refused them from drawing down on their mortgage that I would refund their deposit. My solicitor told me that this is becoming standard practise and it's something she insists on herself.
It would only cover the bank pulling the plug on the purchaser, not them changing their minds. It was concerning for me at the time.
Your solicitor should outline this to you.

Surely a buyer who wanted to pull the plug could convince the bank to rescind it's offer.......perhaps some new evidence of "changed circumstances" could wing its way to the bank somehow....

fliball123

StoptheClocks wrote: »

I sold a house in February. It was sale agreed in December and empty for over a month.
When the purchaser was ready to sign they asked for a clause to be added that if the bank refused them from drawing down on their mortgage that I would refund their deposit. My solicitor told me that this is becoming standard practise and it's something she insists on herself.
It would only cover the bank pulling the plug on the purchaser, not them changing their minds. It was concerning for me at the time.
Your solicitor should outline this to you.

That is the clause I was talking about it also covers if the time period of mortgage approval has lapsed and the buyer has to reapply if the bank says no the buyer is in danger of losing their deposit over a decision that they have no say over.

fliball123

kevinc565 wrote: »

Interesting. Plenty of buyers would like a term like that in contracts fro sale. Venders not so much!. Give and take = hence a market.

If it's becoming practise then good for buyers as always a risk bank may decide not to play ball , however small, after contracts have been signed leavign the buyer in a messy position.

Well I can see it being used a bit over the next few months people who were sure bets 2/3 months ago are no longer a sure bet now and the bank may not give the approval if they have to reapply

blowin3

Going what ye have said written on the contract that loan approval was agreed. How can that be changed as it is part of a legal document. If the bank or the buyer pull out they are in breach of contract as it's part of the contract and the closing date.

StoptheClocks

The bank can change their mind on loan approval. It's only loan approval in principle.
So if you sign the contract and then the bank refuse the loan you lose the deposit.
So the clause covers the buyer in this scenario. It's frustrating because when they sign contracts the solicitor triggers the drawdown from the bank, the bank will do final checks before releasing the money. This is were people run into trouble. The banks have refused loans leaving people stuck in contracts.

fliball123

blowin3 wrote: »

Going what ye have said written on the contract that loan approval was agreed. How can that be changed as it is part of a legal document. If the bank or the buyer pull out they are in breach of contract as it's part of the contract and the closing date.

It can be changed if the bank decide to say sorry I know we offered you a mortgage but things have changed and we are no longer going to offer you that. When a third party has control over a contract there will always be a clause that if the third party pulls the plug all bets are off

blowin3

fliball123 wrote: »

It can be changed if the bank decide to say sorry I know we offered you a mortgage but things have changed and we are no longer going to offer you that. When a third party has control over a contract there will always be a clause that if the third party pulls the plug all bets are off

Ok that does not sound promising than. The actioner is say everything is ok as he would. The solicitor acting for us also says the same but we have heard nothing from the buyer saying anything to the contrary. The closing date is 2 weeks away. It will horrible if it falls through after getting so close.

StoptheClocks

I had a closing date of the 19th January. It didn't close until the end of February. It was because the purchasers solicitor dragged their feet. The Estate agent was telling me the purchaser wants to get in and had sent the deposit to their solicitor. I had moved out of the house. I was in the dark to what was going on for over 5 weeks. A very stressful time. Good luck with it.

fliball123

blowin3 wrote: »

Ok that does not sound promising than. The actioner is say everything is ok as he would. The solicitor acting for us also says the same but we have heard nothing from the buyer saying anything to the contrary. The closing date is 2 weeks away. It will horrible if it falls through after getting so close.

I would quickly try and find out if the buyers loan approval is close to lapsing as they would get out of it if they have to reapply and got refused the loan