At Loggerheads Over Seasonal Lodging

Posted on December 1, 2009 by | 2 Comments

Tim O'Dwyer M.A., LL.B OPINION
by Tim O’Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au

Real Estate Encyclopedia



 


Contractual time limits which run out between Christmas and New Year should, as this Blog has previously shown, ring alarm bells for purchasers and their legal advisers.  Nevertheless, neither developer Bannercorp* Pty Ltd nor its solicitors heard so much as a tingle when a critical condition in Bannercorp’s time-of-the-essence purchase contract (dated 3rd August, 2007) was mutually extended from 90  to 150 days from the contract date.  This new deadline (for “lodging” Bannercorp’s Development Application) fell due on 31st December, 2007.


Meanwhile the vendors, Mike and Kate Moran*, realised that they had undersold their acreage property.  When another developer offered a significantly higher price, Morans entered into a separate contract with that purchaser – subject to the existing contract being cancelled by 3rd January, 2008.


Despite some eleventh hour argy-bargy about when Morans were contractually obliged to counter-sign the Development Application, by midday on 31st December Bannercorp had everything ready to lodge with the Council.


That Monday was not a public holiday in this rural shire, but the Council offices were closed for Christmas-New Year  – as they had since 21st December .  Undeterred, Bannercorp put its application (and  accompanying cheque) through a slot in the Council’s door around 4.20 p.m.


Next day Morans’ solicitors sent Bannercorp’s solicitors this “Happy New Year” fax:


            “As your client has not lodged the application on time, we give notice of termination”.


Bannercorp’s solicitors’ rejected the termination, and explained how the application had been “submitted to Council by its overnight mail box.”   Morans were unmoved.


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2 Comments

  • http:// says:

    Hi Tim,

    Just read your latest article.

    Why wasn’t there a competing offer under contract and why should the first buyer be given exclusive rights on the property when they offered less money??

    I’m afraid my wise old friend, these backup contracts are a recipe for disaster.

    A contract race or a competing offer under contract , would be the more sensible approach I think. ( First to form a definite contract)

  • http:// says:

    Tim O’Dwyer Friday Dec 4, 2009 5:18 PM

    Dear Goose,

    The contract in question had been made some months before the Xmas/New Year hiatus.

    The sellers believed they were getting the best price at the time the Contract was made. No other buyers were in sight. There was a later back-up Contract, I understand, for a higher price. But this second Contract was obviously subject to the first Contract’s coming to an end. I’m told by the solicitor for the sellers that this second Contract did not proceed on account of the litigation on the first Contract. The property is still for sale, apparently, because the market for subdividable broadacre in that area has dropped!

    George Rousos Dec 4, 2009 5:47 PM

    Tim, it seems to me there was no equal bargaining power on the first contract and therefore, this was a benefit to the buyer but to the detriment of the seller, keeping in mind, that the seller is considered the stronger party up until there is an equitable contract or binding contract.

    Someone should tell the other solicitor, that it is quite legal for any seller on their own terms to accept a higher offer or renegotiate on the existing offer, this of course being in their best interest.

    How was the seller compensated for the loss of earnings on the second contract? If it was me, I would be taking it up with the sellers solicitor for not protecting my interests and for breaching a fiduciary duty with regard to a client.

    If there was evidence of foul play and deception, then that is different, but I somehow doubt it.

    I think it was just one solicitor’s inability to hold a fiduciary relation or act in a fiduciary capacity to their client.

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