Purchase Price Question

Croissant17

Hi Guys,

If hypothetically the purchase price on a contract was lower than the agreed purchase amount, would there be an obligation to tell the solicitor for the vendor? Would this mean the house would have to be sold at the lower price if both parties signed the contracts? Hypothetically, neither solicitor seems to have noticed.

Thanks

Interested Observer

I'm sure the seller will notice. it sounds like you're trying to screw them out of money you agreed to pay, correct?

myshirt

It's fraud.

People a lot smarter than you and I have tried it in more sophisticated ways than you could ever imagine, thinking they were genuises.

Spoiler Alert: They weren't.

whiskeyman

Seems a fair question? Not sure how it's fraud either?
Both parties have signed the contracts. The amount matches in both.
If I were the vendor, I'd be having a go at my solicitor for not spotting it!
When buying my first place, I remember going though every single word with my solicitor, who had already done same.

I would have thought the contracts are legally binding?

DubCount

whiskeyman wrote: »

Seems a fair question? Not sure how it's fraud either?
Both parties have signed the contracts. The amount matches in both.
If I were the vendor, I'd be having a go at my solicitor for not spotting it!
When buying my first place, I remember going though every single word with my solicitor, who had already done same.

I would have thought the contracts are legally binding?

I guess that may depend to some extent on the level of difference between what is in the contract and what was agreed (what is market value). If the price was listed as 30,000 in stead of 300,000, then that may not be viewed as adequate consideration on both sides for a valid contract to exist. If it was proposed as 296,000 in stead of 298,000, then maybe that is OK.

Claw Hammer

In general, there will have been a booking deposit which will have stated the purchase price. The estate agent will have sent letters to each solicitor stating the purchase price. If and when the Vendor notices that the full sum expected hasn't turned up, they will have little or no difficulty in having the situation rectified given that there would be extensive documentation contradicting what was on the contract. It would be in utterly bad faith and silly to try and take advantage of what is obviously a mistake. It is the equivalent of getting too much change in a shop and walking away with it.

masterboy123

The house I purchased (over 250,000) had 500 euros less mentioned on the contract, I realised it after both parties signed contract. I informed my solicitor and builder about it.
Never heard anything back from anyone. So I guess small amounts like this are acceptable. Unless they charge this 500e before handing the keys

Moomintroll99

Sometimes it is masked by "selling the contents".

One house we bid on, the vendor was trying to do this, offering the contents for 30k, which was about 10% of the asking price. Presumably to avoid tax - she had been running a B&B business in the house so maybe there were some CGT implications?

The contents were definitely not worth 30k and when I checked on the register it had sold for around 10% over the asking price, so maybe buyers were unwilling or unable to do this. If they were stretched with a mortgage it would be impossible, as no bank would give an extra 30k for a few ancient sofas.

I guess it would be feasible in small amounts like 10k or so though, where it was a realistic price for household goods.

Askthe EA

I think Moom is correct, is the difference notable? Did you buy with contents included? Contents are excluded from the contract price which is what is stamped and therefore listed on the price register.

Good news for you is that your stamp duty will be less too.

Croissant17

Thanks very much for the replies.

The difference is a large amount- 80k. It is a new build house so there aren't any contents. It has been flagged with our solicitor. We are hoping to hear back in the next couple of days. The contracts haven't been signed yet (and we want to sign them asap).

Presumably it's just a simple case of the developer sending us the wrong contracts. We were just curious as to what the legal position was if the contract had been signed by both parties as we only noticed the price was wrong on our final read through. It was a bit mental that neither solicitor seemed to notice. We are obviously not intending to screw anyone out of 80k!

Graham

Check to see if the site is a separate contract.

amcalester

Graham wrote: »

Check to see if the site is a separate contract.

My new build had 2 contracts.

1 for the site and 1 for the house, the combined price was the total agreed price for the house.

Didn’t make any difference to the mortgage app etc, I just had to sign 2 contracts at the solicitors.

Graham

Thanks amcalester. I know it's not all that unusual.

I have a vague recollection that there can be tax advantages for the developer if the site is sold separately.

Victor

Graham wrote: »

I have a vague recollection that there can be tax advantages for the developer if the site is sold separately.

Not anymore.

What may exist is a situation where the land owner and the builder are separate parties.

Askthe EA

Victor wrote: »

Not anymore.

What may exist is a situation where the land owner and the builder are separate parties.

We had this and had to pull out. Was a disaster.

ted1

whiskeyman wrote: »

Seems a fair question? Not sure how it's fraud either?
Both parties have signed the contracts. The amount matches in both.
If I were the vendor, I'd be having a go at my solicitor for not spotting it!
When buying my first place, I remember going though every single word with my solicitor, who had already done same.

I would have thought the contracts are legally binding?

It’s fraud if the price is low so the seller avoids CGT or similar


80k difference on a new build. Would this be 13.5%?

Askthe EA

ted1 wrote: »

It’s fraud if the price is low so the seller avoids CGT or similar


80k difference on a new build. Would this be 13.5%?

It would be if the purchase price is €595,592 which doesn't sound likely.

Claw Hammer

It is fraud if the parties are in collusion to commit a fraud by agreeing to understate the price on the contract and paying the balance over separately. It is simply a mistake if the wrong price issued on the contract. If someone knowing of a mistake by the other side tries to take advantage of it they can be made pay the balance.