HELP! Can you terminate a contract

[Natasha'smum]

Hi there,

We seem to have got ourself into a bit of a jam. We sold our house and had to take a little less then what we had wanted. The problem is we brought another house that involves a higher morgage :eek: .

Settlement is on the 21/12 and at the moment dh business is in the quite months and has been for the past 2 months so there is not a lot of finances coming in and what does come in dh has to pay his bills with.

I have now had to go back to part time work on the weekends which I really am not looking forward to as I am going to miss dd and dh has started to apply for other positions which means his bussiness that he has put all his blood sweet and tears into for the past 7 years will probably fall apart. I can't really run the bussiness as it is a scientific field and I am not a science person :o

What I am wanting to know is there anyway to get out of a contract. I know that the 3 day cooling off period has passed and our finances have been approved by the bank but dh did give them inaccurate info in our favour to get the home loan.

We really do want this house bit we have just realised that at the end of the day we really can't afford the repayments at the moment and because of the higher morgage dd may be an only child which I would find devastating as I always had my heart and mind set on 2 children.

Any ideas/advice would be appreciated

Yvonne

[lil monkey]

Is your loan conditionally approved or unconditionally approved?

If conditional, the bank will require all your documents again which you can show that you really don't have the income to meet the repayments on this mortgage.

If the loan has been unconditionally approved, I think you can apprach your lender and explain your circumstances have changed and see whether they would still approve the loan.

Was the house purchase subject to finance approval etc? You need to read the fine print really carefully as your finance has already been approved - has the seller been advised of this? If they haven't then you may have a way out.

[talon]

when we bought our house through a real estate agent we had the cooling off period and if we decided to cancel the contract after this (before settlement of course) then it was possible but we would lose a percentage of the deposit we had made.

have a quick scan of the contract the agent gave you - it should be in there somewhere.

[draught]

Natasha
Sales of houses fall through all the time - and you are being really sensible getting out before you put yourself in a shocking financial position. It is hard to give advice without knowing what your contract says, what you have signed, and how far through it all you are, but on my basic understanding of how property transactions happen, you should be able to get out of the contract. Nothing is binding until it is all signed, sealed and delivered normally. But it sounds like you need to check with the bank, the person who is doing your conveyance, or the real estate agent to find out exactly which point you are at and what you will need to do. Even if you do lose part of the deposit you will still be better off financially in the long run by the sounds of it!

[rynosmum]

Hi Yvonne,

R/E Contracts are slightly different in each state. I know the QLD contracts well but you may wish to check with the Real Estate Institute of Victoria for more specific infoon your area.

Just for future reference, the 'Cooling Off' period isn't actually a great way of termination as you can still legally be charged a penalty of 0.25% of the purchase price. The best way is to put in a specific finance or building inspection clause. eg "Contract subject to finance of client's choice within X days". That way, you can always terminate as you simply didn't get the finance you wanted, whatever that may have been - no proof generally necessary (so you can also terminate for other reasons but class it as this).

Unfortunately in this instance, you weren't to know that you would want to terminate so....the girls are right (and Draught would probably know better than us all). You can pull the contract at anytime up until it goes unconditional (any clauses you had re building inspection, pest inspection or finance expire). Then it is considered Sold to you and unconditional.

In QLD at least, anything after this date and prior to settlement is a messy area - you can pull the contract but will forfeit your deposit and any interest earned since it has been in the R/E trust account, you can be 'sued' by the buyer for their conveyencing legal costs to date and also the scary bit...the vendor 'could' choose to also try to recoup from you liquidated damages. If they need to put the house back on the market, they could possibly claim from you their advertising expenses for the remarketing and any loss they realise if they sell their house to the next buyer at a reduced rate.

Just a note - the property is your risk at the moment, if you don't already have insurance on it, you may wish to get a covernote until this is all sorted (They can generally bill you and will cover you for a couple of weeks before you even pay - and can then just cancel it without requiring any payment).

It's a great idea that you are considering this if it is going to cause financial hardship later but I really recommend you speak to either your conveyencing solicitor or even better, the REIV (they should have a website) before the contract goes any further.

Best of luck, I hope there is a loophole there for you ! :)

Katrina

[draught]

Sounds like Rynosmum definitely knows more than me in this area (my speciality is crime, not property!) so I would take her advice about checking what position you have found yourselves in.