Real Estate & Off-the-Plan Contract Disputes
The management of real estate contract termination issues requires experience and knowledge. Understanding contract sensitivity demands technical excellence. Buyers or sellers wishing to enforce transactions must be prepared to face sustained and novel contentions. Those that seek an escape route must be armed with all available arguments.
Other disputes can arise from settlement delays, compliance issues, outgoings adjustments, interest calculations and due diligence determination.
Real Estate Contract
THE SEQ HOME UNIT MARKET IS FACING A TESTING PERIOD
A wave of construction has added more than 5300 units as at the end of June 2017 – most signed up for off-the-plan by investors – in the Brisbane inner city, with more than 11,000 underway and due for settlement within the next 12 months.
Hundreds of off-the-plan buyers are trying to off-load the units they signed up for as long as three years ago.
Agents are notifying new owners they probably would lose money unless they can hold for at least five years.
With tougher rules on investment loans in play since late 2016, buyers are facing up their options.
Many are walking away from deposits up to $80k in the hope the developer is content to call it quits on that basis.
They are hoping the developer can still re-sell and that the forfeited deposit covers any loss on resale, re-selling costs, interest and legals.
Others are hoping for a “settlement error” on the part of the developer that will open a potential window to terminate and demand the deposit’s return.
History – as recent as just a few years ago when GFC related contract termination were common – tells us that unless the buyer can negotiate a deal with the developer perhaps for the payment of a fixed sum in addition to the deposit – the buyer will be better off going ahead with the buy, than fighting the developer in a court.
In many GFC cases, the damages buyers were eventually ordered to pay after a developer default sale – including legal costs and interest – came to 80% of the original unit price, with absolutely nothing to show for the payment.
There are some legal avenues that can be explored to support a valid contract termination. These include issues relating to misleading and deceptive conduct or “unfair terms” that might arise from nondisclosure or the relationship between a marketer or financial planner and the developer.
CoreLogic reported last month that around 25% of Brisbane apartment sales in Brisbane in first quarter 2017 were at a loss. These figures do not include walkaways and forfeitures.
In the GFC, prices typically fell by 30%. Agents in the field are reporting current resales on some inner-city projects at that deficiency.
Those buyers that do proceed will however face a much different rental market than they might have expected. Agents are reporting a high vacancy rate and tumbling rents as a result.