Opening the little post box door and grabbing the mail, I habitually ripped open each envelope on the walk back to the car.
That’s when I saw it; a legal letter addressed to me.
I was being sued.
That ‘not so fun’ feeling was 18 years ago when I didn’t settle on a land contract. I was doing spec builds at the time (building new homes and then selling) as the market was very active and had done quite a few to the point of not needed the next block I had contracted.
As the market was in demand, I said to the sales agent that I wasn’t taking the other block. I knew they would sell it in a heartbeat.
Months went by as the current project finished and sold. That’s when the letter arrived.
The seller had (rightfully) ‘reserved their rights’ under the contract I had pulled out of.
I called him up, as he was the land developer.
I went to see him.
He told me he sold the block (that I pulled out of) right away.
Why was he suing me?
The short version was that he was watching what I was doing, building homes, and selling for profit, didn’t like that I pulled out of the contact and waited till I finished the last home.
“I have estimated what you have made on these projects, and I want a piece of it”
That is what he said.
Wasn’t because he was out of pocket, or that he found me disruptive, but simply that I had made money from his blocks in the past, and he saw the opportunity to exercise his ability under the contract and make me pay.
Nice hey…!
We came to an arrangement, and it all went away. I put the cost down to learning, like all costs it takes to learn things in life and business.
I figured I was still ahead compared to paying for uni fees!
To me that has never happened again, I made sure of it.
Not everyone gets sued however..
I had a call a few weeks ago from a client who was buying a property and now didn’t want to buy it.
Their situation had changed substantially and even though the contract was signed, underway, finance reviewed etc, they wanted/needed out.
Disclaimer: I am not a solicitor, and this is not legal advice, get your own from a solicitor because they are trained, I am not.
The answer to my client was not pretty, they couldn’t get around losing their deposit and we even tried to find another buyer to replace them on the contract, but to no avail.
In the end they lost their deposit and moved on.
They didn’t get sued, the developer simply sold the land for more money and moved on too.
Can you get out of a contract and not lose your deposit?
That is what we all want to know..
There is no blanket answer as each contract is different, however it will depend on the stage of contract and the terms within it.
It absolutely is based on those things.
While we can’t very easily change contracts after they are signed, we can make sure there are clauses in contracts to alleviate the issues before signing.
(I understand this varies from State to State so I am using QLD contracts)
In QLD we make sure we load clauses into the contract that benefit the buyer as best we possibly can.
Not too many that makes it look unattainable, but enough to cover where possible.
Finance, due diligence, building and pest inspections, are all examples of the types of clauses we consider.
That sort of contract structuring, done with your solicitor, will make for a contract weighted in your favour, if possible.
That’s not possible..
Yes I know, right now that might not be possible, depending on demand in your area of interest, however that is why you need to review the risk vs reward ratio.
Is the risk of me buying or not buying this property, something I am willing to take?
What can I lose if I buy it?
What can I lose if I don’t buy it?
Make sure you have those conversations BEFORE you buy.
If you have bought and you want to get out, there are two things you need to do.
1) See your solicitor immediately
2) Communicate
Pending what your solicitor says, make sure you communicate with them and the other parties involved, clearly and efficiently.
It might not make a difference to your outcome if you have a hard or greedy person on the other side.
However even the most altruistic person will not be able to work with you for a solution, if you don’t communicate.
If you want to secure your financial future using property, then contact us here or call now on 1300 66 77 89.
Since 2004, Scotty North has been helping people buy the best properties for their needs at prices that simply speak for themselves.
Scotty has been instrumental in bridging the gap between financial planning and traditional real estate transactions through his property advice model.
Scotty North is a Qualified Property Investment Advisor (QPIA), with accreditation’s in financial planning, mortgage broking and real estate.
By carefully considering his clients’ goals and planning for market changes via demographics and trends, Scotty designs a future proof outcome not only specific to the client’s needs but dynamic in its execution with performance indicators and exit strategies built in.