Dec 20, 2018 6:19 pm
Hi, we signed our building contract with our builder subject to satisfactory bank valuation by our bank. The bank valuation came in quite a bit lower than we expected- to the point it will push our lend well into LMI territory. We told our builder that we may not be able to proceed, but they will terminate our contract and seek 3% of the contract price from us. We have paid about half of this with deposits over the past few months, and are prepared to walk away from that for work already done, but we thought subject to finance we could back out- kind of like a cooling off period.
Our builder has taken over a month to get PCVs out to our bank- once the bank had all the information they needed, they took less than 4 days to get us an answer.
Does anyone know where we stand?
We can walk away from the initial deposit but will challenge the balance of the 3% if we have a leg to stand on. Anyone been in the same boat?
Thanks again guys!
Re: Contracts signed-subject to Bank Val-2
Dec 21, 2018 9:11 am
3% Sounds reasonable and you could be up for the extra costs read your contract/agreement for the Preparation of Plans
If there were other consultants involved you could be up for 5-10%
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Re: Contracts signed-subject to Bank Val-3
Dec 22, 2018 7:06 am
If your "subject to" to clause is active and there is nothing else in the contract about you forfeiting 3% you should be able to walk away without paying more. In any case get them to chase you for the payment and ask them to articulate the the basis for their claim. If it gets messy you will need a legal assistance.
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Re: Contracts signed-subject to Bank Val-4
Jan 14, 2019 8:57 am
Another thought is - if you do wish to proceed - to get another valuation done up front with another lender and see if the valuation is incorrect. But generally I would agree with Building expert, depending on what is in the contract - subject to finance usually means just that - you can walk away without forfeit. There are usually clearly set monies that are already paid before that stage that are lost (for soil testing and contract prep) but not anything more.
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Re: Contracts signed-subject to Bank Val-5
Jan 14, 2019 9:11 am
Thanks for the input so far guys. It’s very much appreciated.
We have formally written back to our builder informing them that had we received the full pricing in the contract we would have had an answer back from the bank inside the 5 day cooling off period, and well before the 30 day subject to finance approval clause, and would have had opportunity to pull out.
The fact they took over 5 weeks to get our final figure sorted after initial contract signing means we are outside those periods before the bank even got a figure- let alone were able to order a bank valuation.
They have escalated it to upper management and we hope to get a response sometime this week. If they don’t act in the spirit of what we feel is just, then we will be forced to push it further.
Thanks again for the input.
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