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  1. #1

    Default should buyers pay for vendor's agent's commission when the sale didnt go through?

    We have recently bought a property and paid a 10% deposit upon agreement being unconditional but vendor was unable to settle even after we postponed the settlement date and we also went further to serve a 12 working day vendor settlement notice (as per the S&P).

    Eventually we decided to cancel the agreement but was only able to retrieve 40% of the deposit back from vendor's solicitors after the vendor's solicitors had deducted his legal fees from the deposit that was in his trust account. The remaining deposit had already been taken by the real estate agent as commission.

    Does anyone know how we should proceed in recovering the remaining deposit (i.e. agent's commission)? Our solicitors have already sent the real estate agency a letter 2 weeks ago requesting for the refund of the deposit since it was the vendor defaulting on the agreement and their commission should have been paid by the vendor and not the purchasers. But we have not heard back from the agency.

    As we are trying to keep our legal costs at a minimum, and the amount we are trying to claim is slightly below 15k, we are thinking of bringing this to disputes tribunal to recover the deposit from the agency and the legal fees incurred from the vendor. Has anyone experienced anything similar and can you advise if there's other options for us from here?

    Also, is there anyway we can prevent a situation like this from recurring again?

  2. #2

    Default

    Quote Originally Posted by epoh View Post
    Also, is there anyway we can prevent a situation like this from recurring again?
    Make the agreement conditional on you receiving confirmation of the approval of the sale by the vendor's bank.

  3. #3

    Default

    Quote Originally Posted by speights boy View Post
    Make the agreement conditional on you receiving confirmation of the approval of the sale by the vendor's bank.
    In reality, will you only receive confirmation of the approval of the sale by vendor's bank on settlement date? Or would you be able to receive the confirmation beforehand?

  4. #4

    Default

    Quote Originally Posted by epoh View Post
    In reality, will you only receive confirmation of the approval of the sale by vendor's bank on settlement date? Or would you be able to receive the confirmation beforehand?
    The sale is conditional until you receive that confirmation.

  5. #5

    Default

    Quote Originally Posted by speights boy View Post
    The sale is conditional until you receive that confirmation.
    I guess that means the sale is only conditional till settlement date?

    What if there's no mortgage on the property and the vendor decides to back out of the agreement after it turned unconditional?

  6. #6

    Default

    Quote Originally Posted by epoh View Post
    I guess that means the sale is only conditional till settlement date?
    I don't know for sure, however I don't see why the bank can't say yes or no well before settlement day.
    What if there's no mortgage on the property and the vendor decides to back out of the agreement after it turned unconditional?
    Then I guess you set your lawyer onto the vendor for your deposit and costs.

  7. #7
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,696

    Default

    I am amazed that the vendor's solicitor can deduct his fees from the buyer's money. (As by the time his fees were deducted, he would have known that the sale wasn't going ahead.)
    My blog. From personal experience.
    http://statehousinginnz.wordpress.com/

  8. #8
    Join Date
    Dec 2007
    Location
    Wellington
    Posts
    5

    Default

    Quote Originally Posted by epoh View Post
    We have recently bought a property and paid a 10% deposit upon agreement being unconditional but vendor was unable to settle even after we postponed the settlement date and we also went further to serve a 12 working day vendor settlement notice (as per the S&P).

    Eventually we decided to cancel the agreement but was only able to retrieve 40% of the deposit back from vendor's solicitors after the vendor's solicitors had deducted his legal fees from the deposit that was in his trust account. The remaining deposit had already been taken by the real estate agent as commission.

    Does anyone know how we should proceed in recovering the remaining deposit (i.e. agent's commission)? Our solicitors have already sent the real estate agency a letter 2 weeks ago requesting for the refund of the deposit since it was the vendor defaulting on the agreement and their commission should have been paid by the vendor and not the purchasers. But we have not heard back from the agency.

    As we are trying to keep our legal costs at a minimum, and the amount we are trying to claim is slightly below 15k, we are thinking of bringing this to disputes tribunal to recover the deposit from the agency and the legal fees incurred from the vendor. Has anyone experienced anything similar and can you advise if there's other options for us from here?

    Also, is there anyway we can prevent a situation like this from recurring again?
    Hi Epoh

    I have had the same situation a few years ago and can share that with you as a guide.

    I had a $10,000 deposit on a house in Auckland and then the vendor could not settle. The real estate agent and agency refused to give me my deposit back. According to them the term of the contract is for the Agent to supply an UNCONDITIONAL S&P agreement to the Vendor which they did. On settlement day, the vendors bank would not release the title because the funds supplied would not of cleared their mortgage (they were over capitalised on a couple of properties).

    I put a caveat on their title until I could resolve the issue and I put a formal compliant into the newly formed NZREAA. They upheld the Agent position (unbelievable really!) and so I lost all my deposit plus legal fees in taking advise on what to do.

    Needless to say that this agent and agency is now on my "black list"and I will not be dealing with them ever again.

    I seriously question the ethics of this as I also tried to make the case that the Agent was representing the Vendor and trying to sell something that was unsellable. Also, the agreement is with the Vendor and they should pursue getting funds from them and not the purchaser who was no way at fault.

    The worst thing was, that after my experience, they advertised the property again!

    I can say that I have heard of other people that have had the same experience, however, the Agency had the decency to refund the deposit in full, so it sounds like it is at the discretion of the Agency.

    Since then, I have done a few different things when purchasing property.

    Here are a couple.

    1. under the POSSESSION Clause, I will add the deposit, subject to paid to the purchasers solicitors' Trust Account and released on Settlement.
    2. Added a further clause..This agreement is conditional upon the vendors solicitor confirming that amount agreed to on this agreement will release any hold over this property and there will be clear title to proceed with the purchase of this property on settlement day.

    Hope that helps

  9. #9

    Default

    Hi pta,

    we are in the same situation! the vendors couldnt settle due to the same reasons as yours and we caveat subsequently as well. I'm hoping to find another avenue (besides disputes tribunal) to recover our funds from the agents and was also planning to claim the legal losses we incurred so far against the vendors in tribunal.

    Just a quick question regarding the 2nd clause that you've mentioned. Have you encountered cases whereby the "vendors solicitors confirm that amount agreed to on this agreement will release any hold over this property and there will be clear title to proceed with the purchase of this property on settlement day" before settlement day itself? My lawyer advised that this will only take place on settlement day itself.

  10. #10
    Join Date
    Dec 2007
    Location
    Wellington
    Posts
    5

    Default

    Yes......that clause has to be agreed, before unconditional from the Vendors Solicitor. I have used both of these clauses (and others) and it really depends on the situation as to what clause you can use.

    Generally, I would say that your lawyer is correct and it only really takes place on Settlement day (depending on financier) but if it didn't settle then that would be a breach of the contract from the Vendors side and give you more weight with your claim


 

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