Can I get my Deposit Back? Are my hard savings gone?

FrancieB

Hi,

I purchased a new property in Dundalk in April 2008. The agreed sale was 286,000k. I paid 2k holding deposit and on loan approval I paid a further 10k when the contract was signed.

The house was due to be completed in Aug/Sep 2008 and is still not completed nor is there any sign of it being completed.

My loan offer for 92% of cost was approved in May and after 6 months it lapsed. The bank I got the loan offer from will now only offer me 80% of the total price.

I do not have the 50K approx remainder of the purchase prices to complete the sale.

It took me forever to save this money for my first house.
Can I get my 12k deposit back? What are my options?

Thanks

Paulw

Contact your solicitor. If the building isn't complete then you may have a claim to enable you to get back your deposit.

But, your solicitor will be best placed to answer your questions.

Jo King

FrancieB wrote: »

Hi,

I purchased a new property in Dundalk in April 2008. The agreed sale was 286,000k. I paid 2k holding deposit and on loan approval I paid a further 10k when the contract was signed.

The house was due to be completed in Aug/Sep 2008 and is still not completed nor is there any sign of it being completed.

My loan offer for 92% of cost was approved in May and after 6 months it lapsed. The bank I got the loan offer from will now only offer me 80% of the total price.

I do not have the 50K approx remainder of the purchase prices to complete the sale.

It took me forever to save this money for my first house.
Can I get my 12k deposit back? What are my options?

Thanks

First off, did you make your contract subject to loan approval? If so you can walk away. If not you need to talk to your solicitor. There are ways of getting out of contracts but they can be difficult and expensive to organise. For example you can give the builder 28 days to complete the building and then repudiate the contract if the house is not completed on time. Not alone are you at risk of losing your deposit but you may be sued for any shortfall if the builder sells the house at a lower price. You may have to consider getting a Dublin based solicitor to sue your own solicitor, for not advising you properly, on the risks you were undertaking.

SpiderPiglet

The exact same thing happened to a friend of mine, she got loan approval but the house was not completed by the time the approval time lapsed.
She went to the builder and he agreed to lower the price for her.

Perhaps you should talk to the builder, I'm sure he/she will be willing to lower the price so you can get approval.... he wants to get rid of the property after all.

DublinDilbert

SpiderPiglet wrote: »

The exact same thing happened to a friend of mine, she got loan approval but the house was not completed by the time the approval time lapsed.
She went to the builder and he agreed to lower the price for her.

Perhaps you should talk to the builder, I'm sure he/she will be willing to lower the price so you can get approval.... he wants to get rid of the property after all.

I guess the problem is that the LTV ratio has changed from 92 -> 80%, which is slightly different....

Even if the builder would drop 50K off the price, the bank would still want cash equivalent to 20% of the price you are paying for the property....


So the figures would look like:-

€286k x (1-0.92) = €22K cash (inc deposit)
€286k x (1-0.80) = €57K cash (inc deposit)

If the builder knocks 50K off, so the new price is €238K

€236k x (1-0.80) = €47K cash (inc deposit)

jackal

It is tragic how people enter into a binding contract where all the risks are on their side and all the benifit on the developers. At the least the contract should have been subject to loan approval. Terrible but all too familiar low standard of advice from your solicitor there.

FrancieB

I just didnt think this was something that could happen to me.

When we signed the "unconditional contract" my solicitor told me that the builders solicitor required my loan approval docs.

He says that legally I'm not entitled to my money back as we signed a contract that gave the builders 24 months to complete. Is their no protection against this? It was completely out of my control.

I got loan approval, had my hard saved 8% deposit. As I was to move into house in August I spent approx 10k on furniture, floors, sofas, carpets, new kitchen, applicnace and extra kitchen and electrical mods to house. Now the builder was late and I have no mortgage???

SO now I have no savings, and a 10k of household furniture that is no good to me.

uberwolf

There are two institutions offering north of 90% to First time buyers. Check them out.

This may be an opportunity to get a few pennies off the price.

But ultimately, this must amongst the few situations where one party can fail to deliver on their end of a contract and still demand the other party perform. The solicitors are responsible for this; for failing to distinguish between common practice and good practice on their clients behalf.

mikemac

FrancieB wrote: »

When we signed the "unconditional contract" my solicitor told me that the builders solicitor required my loan approval docs.

He says that legally I'm not entitled to my money back as we signed a contract that gave the builders 24 months to complete. .

I think it's pretty sad that people sign up to these one sided contracts. All the risk lies with you and the developer is sorted

Maybe your solicitor should have tried to amend the contract at the time but too late for that now

FrancieB

Ah well. Its goodbye to that then. Maybe I'll be able to buy in another 5 years when i save the deposit again

loyatemu

have you tried Halifax - they just announced a new offer for first time buyers
http://www.halifax.ie/index.jsp?1nID=94&pID=104&nID=110

I believe AIB are doing something similar...

delly

Your solicitor should have kicked up about the 24 months imho.

John Mason

Unfortunately, you signed the contract. did you read it first?

i would talk to builder directly or go to your solicitor and ask him to speak to the other side, sometimes there can be allowances made

Jo King

FrancieB wrote: »

I just didnt think this was something that could happen to me.

When we signed the "unconditional contract" my solicitor told me that the builders solicitor required my loan approval docs.

He says that legally I'm not entitled to my money back as we signed a contract that gave the builders 24 months to complete. Is their no protection against this? It was completely out of my control.

I got loan approval, had my hard saved 8% deposit. As I was to move into house in August I spent approx 10k on furniture, floors, sofas, carpets, new kitchen, applicnace and extra kitchen and electrical mods to house. Now the builder was late and I have no mortgage???

SO now I have no savings, and a 10k of household furniture that is no good to me.

It appears to me that your solicitor was negligent in not advising you of the risks you were taking. The property market was in meltdown at the time and to allow the builder 24 months to build in a situation where your loan approval was for a six month period was lunatic. If the contract stated that the builder had 24 months to build where did the completion date of August comne from? You need to get yourself a different solicitor in Dublin who will sue your curent solicitor and or get you out of the contract.

Eurorunner

jackal wrote: »

It is tragic how people enter into a binding contract where all the risks are on their side and all the benifit on the developers. At the least the contract should have been subject to loan approval. Terrible but all too familiar low standard of advice from your solicitor there.

In fairness, over the last few years, there has been little protection for buyers - contracts are skewed to the advantage of the builder. There was no completion date and the whole thing was far too vague. That was the market at the time and i'm sure theres now the opportunity to iron these things out before signing.
That said, I think the state needs to step in and enforce some minimum standards. A completion date and opt out in the case of withdrawal/amendment of loan approval as standard. But the building lobby is far too strong so will probably never happen...

FrancieB

Got some good news out of it all this morning. Apparantly the house i purchased in Marlmount in Dundalk has dropped in price by 50k. Maybe the 14k deposit was a small price to pay compared to waht some people are gettgin shafted with