Article by Peter Lee, Property Law Accredited Specialist
Have you been gazumped?
I have always loved the word gazumped. It is often used in New South Wales property transactions where the seller unilaterally pulls out of the contract and leaves the buyer high and dry.
It is a foreign concept in Queensland because we have binding contracts. In Queensland, when a buyer makes a written offer and the seller accepts, the agent promptly provides a sale contract. Once both parties sign it, the property is legally sold, reducing the gap between offer and contract.
However, I have recently seen a dramatic increase where sellers are trying to do exactly that, or demanding a price increase in order to proceed with their sales.
This is arising in ‘off-the-plan’ sale contracts, where developers are complaining that increased costs entitle them to increase the sale price of the apartment (or other). However, that is often simply not true.
What to do if your builder increases the cost on a fixed-price contract
Do not accept such comments from sellers or developers. You are a party to a binding legal agreement, albeit fairly complex, and it probably entitles you to the ownership of the unit at the price agreed. It is highly unlikely that the contract allows a price increase per se, and it may not give the seller the liberty that they claim to extricate themselves from the contract.
Often these price increases are $100,000.00 – $200,000.00. It is worth spending a couple of thousand dollars to get an experienced and competent lawyer, such as our professionals at GLG Legal, to read your contract and advise you whether the seller can or can’t terminate the contract or force the price increase.
Even if we can’t stop them increasing the price, we often have success in negotiating a lower price increase, saving the client tens of thousands of dollars.
We are currently involved in several court actions claiming substantial damages for buyer clients who have had their contracts terminated by the seller and we are very confident that they will recover substantial damages. We have opinions from several Barristers supporting the position of these buyers.
What to do if termination rights are given to the seller?
Even in circumstances where the contract may give termination rights to the seller, there are still legal arguments why the seller can’t use those rights. This might include waiver, expiry of time, intervening steps taken by the seller, or that the seller has caused the delay or the problem or contributed to it.
As a buyer you have a number of consumer protection laws to assist you. including the Fair Trading Acts, the Unfair Contracts Act and the Competition and Consumer Act. All of which have legislated improvements in your position as buyer, and all have substantial provisions to protect buyers in these circumstances.
Often, all we need to do is create an arguable case which forces the seller to reconsider their legal position and/or approach it with much less determination, substantially increasing the likelihood of a compromise and reasonable negotiated settlement.
What will it cost to have legal representation for a building contract dispute?
Use our experience to help you in these circumstances. We offer an initial fixed-fee consultation, where we can briefly review your contract, discuss your circumstances and form a preliminary view on your legal prospects.
If you achieve nothing other than piece of mind, then that would be money well spent.
Make an appointment with GLG Legal Brisbane by calling (07) 3161 9555 or emailing us at info@glglegal.com.au today.
