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SA Contract Law Questions and Issues with Builder

Discussion in 'Property Law Forum' started by Liz Mariner, 28 March 2016.

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  1. Liz Mariner

    Liz Mariner Member

    26 March 2016
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    Subject: False promises and termination of a building contract.

    My elderly pensioner husband and I decided to downsize. We approached a builder, made it absolutely clear from the onset that what we could buy was totally dependent on how much we could sell our present home for.

    The salesman assured us that:
    1. Our purchase would be allowed ‘Subject to the sale of our present home.
    2. Each of the four townhouses would be constructed individually with construction able to begin as soon as each buyer had the finance available.

    Before we signed the contract
    1. We gave the salesman in writing, the minimum price we could sell our house for. 15 weeks was allowed for the sale.
    2. We had the contract perused by a Real Estate Agent and our local Bank manager. Both suggested changes which were incorporated into the contract.
    3. With 2 additional ‘extras’, we established a final price which was within our means.
    4. We left the contract with the builder, so the authorised changes could be made.

    On 20-2-16, my husband and I attended the office to sign the contract. When it reappeared, we believed it would be the same as the original except for the changes that had been agreed upon.

    As we were signing the contract, a single change made by the builder without consulting us, was pointed out by the salesman, literally as we turned that particular page.

    The time we had been given to sell our house had been reduced from 15 weeks to 8 weeks. Only at this point we were informed that this builder did not normally sell ‘Subject to sale!’

    More importantly, 2 more changes had been made without our knowledge or permission. One we noticed as we signed and the other we did not.

    1. The final price of the house had been increased by $900.00. We didn’t notice it and signed the page. Later, when we discovered our stupidity, the salesman contacted the builder and this mistake was rectified.
    2. The price we were prepared to sell our house for, which had been notified in writing, had been substantially reduced by $40,000 from $270,000 to $230,000. I noticed this and was quite shocked. This was altered back by the salesman on the day and the change initialed by all.

    Only after the contract was signed were we informed that the four townhouses would no longer be built individually, and simultaneous construction would only be started only once they were all sold. One, intended as an office for the display, would not be dependent on a sale. After the start of the build became dependent on the final sale, the construction time frame became absolutely open-ended leaving us vulnerable to an extended duration of renting which we could not afford.

    Over the past three months, the builder has made financial (clerical?) errors adding to the sum of $44,900.00. Each and every ‘mistake’ has been in their favour.

    We are now patiently waiting to end the contract. By chance, our house has not yet sold for the agreed sum. It has 15 days to run.

    Recently, the salesman advised me by email: ‘If your home doesn’t sell, the contract will be cancelled’.

    Question One:
    Does passing the expiry date on the contract make it null and void under contract law or does this not occur until the correct procedures / notifications have taken place?

    Question Two:
    Please, can you tell us, which of the three dates on the contract allows us to take up other options.
    1. Date by which purchaser is to enter into a contract? (11th April 2016)
    2. Date by which contract is to become unconditional? (2nd May 2016)
    3. Date by which settlement is to be effected? (16th May 2016)

    Question Three
    What is the correct procedure to initiate ending the contract? Should this be drawn up by a lawyer?

    Lastly ……
    We have paid $2,000.00 deposit to the vendors being half each for the house and the land. Only the land portion is meant to be refundable.

    Question Four
    Taking into account the utter mistruths (all verified in written emails) told to us by the vendors as enticements to buy, is it worth asking for both of our deposits back?
  2. Michael T

    Michael T Well-Known Member

    9 April 2014
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