Browse Forums Building A New House Re: Your advice please... getting out of a contract 4Oct 13, 2011 11:07 pm Hi newbuilder, i cannot give you any advice but wanted to wish you luck. Best you get out now while you have doubts. I'm a little confused, have you actually signed the HIA building contract? I am confused because you say you are incurring extra costs (with my builder I wasn't allowed any variations after signing the contract). I have put down a few deposits with the big builders, gone to selection etc put pulled out before contract. In this case I got a full refund of the deposit. Re: Your advice please... getting out of a contract 5Oct 13, 2011 11:19 pm stuey0608 I am confused because you say you are incurring extra costs (with my builder I wasn't allowed any variations after signing the contract). I have put down a few deposits with the big builders, gone to selection etc put pulled out before contract. In this case I got a full refund of the deposit. Just to clarify, there are two ways that builders can sign you up - one is the way that you signed up, and the other is the way that it sounds like newbuilder signed up, which is to pay a deposit for the initial documents done, then sign the HIA contract, then do prestart to make any extra changes and upgrades which are then added as a variation to the contract. It perhaps depends on which state you're in, in WA I have only come across builders using the latter way. Re: Your advice please... getting out of a contract 6Oct 14, 2011 8:18 am Word of advice for others, If you do as is done here, and put a deposit on a house or land, always put 'subject to finance', but, BUT, make sure it's subject to finance and YOU nominate the bank and branch for which you require the finance. This is a great weapon to get out of contracts if the need arises. If it's your bank, you just tell your lender NOT to approve the loan and there is your escape route. It's a brave bank that refuses to knock back your loan, especially when told that you will NOT pay it back. Re: Your advice please... getting out of a contract 7Oct 14, 2011 7:48 pm eyspy, that is the worst bit of advice I've ever seen. Are you aware that if a Seller or builder wants to, they can ask for proof as to WHY the finance approval was declined? Also, if a lender declined the finance approval, it would more than likely affect future finance applications. I suggest NOT to use the above advice as a means to getting out of a contract; not only could you still be held to the contract, but you may end up with extra costs on top for legal fees! Go and get some good legal advice from someone properly trained to give it! Oceanic with Nautilus upgrades. Handover 8 September 2010 Re: Your advice please... getting out of a contract 8Oct 14, 2011 9:01 pm Oceanus2 eyspy, that is the worst bit of advice I've ever seen. Are you aware that if a Seller or builder wants to, they can ask for proof as to WHY the finance approval was declined? Also, if a lender declined the finance approval, it would more than likely affect future finance applications. I suggest NOT to use the above advice as a means to getting out of a contract; not only could you still be held to the contract, but you may end up with extra costs on top for legal fees! Go and get some good legal advice from someone properly trained to give it! You are entitled to your opinion and I'm sorry you feel that way, but others may be inclined to think differently. Example: My brother put a contract on a house, and like me was smart and insisted on finance from his bank his branch. All was going well and approaching the date of bank approval when the river running past his intended purchase flooded. It flooded so bad that the house he wanted to buy got flooded half way up the walls. Now obviously he was now not wanting to go ahead with the purchase. He had good history with the bank and finance was not going to be an issue. He went to the bank and said the house that you are about to give me a loan on is now full of water and I want you to knock back my approval, which they did. What he done was smart, and completely legal. How and why the bank knocks back it's finance approval is NO business of the sell whatsoever. With any sale, it is not a sale till all conditions are met. Is this ethical ? Some will say NO,as you have, but it is a tool you can legally and rightfully use, and I believe in some cases SHOULD use. The seller has NO right to ask for Proof. Where did you get that bit of garbage from ? Banks are NOT obligated to disclose their reasons (if the rules have change since I enquired years ago, then I stand corrected, but who said the bank has to tell the truth, I mean they are BANKS after all !). As for affecting future finance applications, not with the same bank, maybe with others (not sure there). As for getting good legal advice, I agree with you there. My advice is only based on life experiences where I sought legal advice, but as laws change it is a good idea to get fresh legal advice, which is why I often say on this forum and others to first see your local consumer affairs office and local ombusman. As for not having your loan subject to the bank and branch of your choosing that is 'The worst bit of advice I have ever heard' Why ? Simple, I learn't years ago the hard way. I was young and wanted a car like most youth. I went shopping in car yards till I found what I wanted. I signed the contract subject to finance. One week later my bank knocked back my loan (too young and no credit history). Guess what then happened ? Just like your stupid advice, the car yard said "No problems young man, we will get a loan for you". Grat I thought, till I signed the contract at 28% interest. I tried to back out, but had no leg to stand on as I had said in the first contract, 'Subject to finance' and not as it should have been 'subject to finance from bank **** and branch ****'. That is why YOUR advice is STUPID. Sorry for any flaming that I may seem to be giving here, but I get a little touchy when I get attacked for giving bad advice when clearly it's the attacker giving the bad advice. Moderators, sorry. I will quit on this topic now. Re: Your advice please... getting out of a contract 9Oct 14, 2011 10:00 pm Thanks for all your words of advice. I contacted our state's consumer affair department today and they were quite helpful. It doesn't seem as bad as I first thought as what I signed was a building agreement, and although the builder doesn't use a standard HIA it looks like I may be able to end the agreement without further penalty. Interestingly when I rang up to talk to the builder about this they put me through to a salesman who was surprised about the price increase and said he would look into it and see what he can do. I will keep you posted on how things progress. Re: Your advice please... getting out of a contract 10Oct 14, 2011 11:47 pm Regarding banks providing information on why financing was knocked back I think that you will find that there are client confidentiality laws that banks must adhere to. It is more than likely that the bank is only allowed to share with a centralised credit agency that the loan had been rejected so you can be credit scored. It will show on future searches but if you have a history with the bank it should not matter. I am sure others who work at banks can agree that banks cannot provide any information on you without your permission. Specifying who you obtain financing from is a smart idea as finance is always available (I guess up until 2008 it was). Also another reason that the financing may be rejected for the flooded house is that the LTV would most likely be severely impaired unless isurance was going to cover the damages, that said it would still most likely impact the value and hence the loan. I am watching this thread as I too paid a deposit back in June and am trying to organise things via email. Responses could be faster but I have substantially changed the plans and what is worrying me is everything is incremental to the starting price but when nothing has been built surely things should be recosted and potentially lower. When you shift a wall its not like you are knocking down a wall, sure things change but I would not expect replacement cost. Anyway thats probably for another rant.... Ciao Mark Re: Your advice please... getting out of a contract 11Oct 15, 2011 8:55 pm eyspy The seller has NO right to ask for Proof. Where did you get that bit of garbage from ? Banks are NOT obligated to disclose their reasons (if the rules have change since I enquired years ago, then I stand corrected, but who said the bank has to tell the truth, I mean they are BANKS after all !). As for affecting future finance applications, not with the same bank, maybe with others (not sure there). As for not having your loan subject to the bank and branch of your choosing that is 'The worst bit of advice I have ever heard' Why ? That is why YOUR advice is STUPID. Sorry for any flaming that I may seem to be giving here, but I get a little touchy when I get attacked for giving bad advice when clearly it's the attacker giving the bad advice. Moderators, sorry. I will quit on this topic now. Eyspy, my "advice" was for the OP to seek proper legal advice, which I don't believe is "stupid". As for my bit of garbage, it comes from the conditions stated in the standard REIWA Offer & Acceptance contract used in WA. Real Estate laws and regulations differ across the nation, so these conditions may not be applicable to those purchasing property in the Eastern States. There are a couple of clauses that could come into effect, those being; 1.1 Buyer's Obligation to Apply for Finance and Give Notice To Seller (a) The Buyer must: (1) immediately after the Contract Date make an application for Finance Approval to the Lender using, if required by the Lender, the Property as security; and (2) use all best endeavours in good faith to obtain Finance Approval (b) If the Buyer does not comply with clause 1.1 (a) or 1.1 (c) (1) then the Contract will not come to an end under clause 1.2 and the Buyer may not terminate the Contract under clause 1.3. The rights of the Seller under this Clause 1.1 will not be affected if the Buyer does not comply with Clause 1.1. (c) The Buyer must immediately give to the Seller or Seller Agent: (1) an Approval Notice if the Buyer obtains Finance Approval; or (2) a Non Approval Notice if Finance Approval is rejected at any time while the Contract is in force and effect. 1.6 Buyer Must Keep Seller Informed: Evidence (a) If requested in writing by the Seller or Seller Agent the Buyer must advise the Seller or Seller Agent of: (1) the progress of the Finance Application; and (2) provide evidence in writing of the making of a Finance Application, in accordance with clause 1.1(a) and of any loan offer made, or any rejection; and (3) if applicable the reasons for the Buyer not accepting any loan offer. (b) If the Buyer does not comply with the request within 2 Business Days then the Buyer authorises the Seller or Seller Agent to obtain from the Lender the information referred to in 1.6(a). Now, having quoted all that, we have to look at the reality of today's world, where some people feel the need to sue for whatever they can. There have been cases heard in courts where a Seller pursues a Buyer for 'damages' where an offer has fallen over because of finance, and the Seller ends up having to sell the property for less than that original accepted offer, for whatever reason. IF it goes to court (and they do! A case was recently heard in the Supreme Court here in Perth), then I suspect documents would be subpoenaed from the Lender. If you're dealing with the local Joe Bank Manager, then maybe s/he could be called on to testify as well? It's not going to sit well with the magistrate or Judge if Joe Bank Manager says "well, your honour, I declined their finance application because they changed their mind and wanted to get out of the contract". Yes, by all means nominate a bank and branch, because that is where the downfall of the recently heard case was; the Buyer's were using a mortgage broker who told them they didn't fit the lending criteria of a particular bank he worked for, and so advised them NOT to lodge the application as it may hurt their credit scoring for future applications. The Supreme Court found that as a mortgage broker is NOT a lender, he should not have made such a decision, and that because the application was never lodged with a Lender, the contract did not come to an end. Result? The Seller's were entitled to keep the deposit AND 'damages' (difference of contract prices). My beef is NOT with stating a particular bank and branch on a subject to finance contract, it is with you telling people to do it so that it can be used to break a contract! Oceanic with Nautilus upgrades. Handover 8 September 2010 Unless there is something in special conditions the builder does not have to give you timeline. 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