(02) 9555 1350
Unless you have got your finances ready, you may, at your peril, venture into signing a property contract. Interested property investors/buyers in Sydney must have closely followed the court ruling on the Paddington property and will have figured out by now why it is such an important verdict.
Dishonouring property contract
Toni Collette and David Galafassi is a couple who entered into a property contract without figuring out if they had the resources available to pay the sale price within the stipulated time. As decided by the contract, the price stood at $6,350,000.
The pair wanted to clear the sale price by using the proceeds of the sale on their Bronte property. As luck would have it, the Bronte property did not sell in time and the pair was forced to dishonour the Paddington contract.
Before taking the legal route, the vendor terminated the contract and the pair had to forfeit the deposit they had made.
Resale price deficiency
When the vendor finally sold the property, he could only procure $5,500,000 and looked to make good the deficiency out of the pocket of the original buyers. The vendor, in this case the claimant, sued the couple for $317,500 plus secondary and tertiary costs, including land tax and legal costs.
Standard Clause 9
Contract for sale of land has a clause called the Standard Clause 9 which guides the judges. The defaulting purchaser can be sued for breach of contract and the deficiency suffered while reselling can be asked of him by the vendor. In addition, the original purchaser can also be made liable to pay the extra costs incurred by the seller while aborting the original sale and facilitating the new one.
It is worth noting that Justice Windeyer asked the couple to pay in excess of $800,000.
Conveyancer on board
I recommend any prospective buyer getting into property purchase to hire a conveyancer. A conveyancer, apart from taking up procedures of Due Diligence and pre-settlement inspection, finds out if there is any possible easement, restriction or encumbrance on the property.
He sees through the title exchange and the process of signing the property contract. With him on board, you will not face what Toni Collette and David Galafassi faced. At Caputo Lawyers, we will be glad to help you with top-draw conveyancers.