Bank halts home sale: Buyer sues for extra $65k paid for house of “like-quality”
When Ai and Kris O’Neill signed a contract to buy a $360,000 residence at Ormeau, little did they know that the purchase price might not be enough to clear the sellers’ mortgage debt and literally leave their family without a roof over their heads.
That’s how this seemingly straightforward deal — the contract was signed in November 2008 – was to unfold, culminating in a verdict in their favour in Southport’s District Court for $65,000 damages.
The agreed settlement date in December arrived but the sellers could not deliver clear title because of a mortgagee payout shortfall. They requested a settlement extension to which the O’Neills consented provided they were allowed into immediate occupation.
Subsequent settlement dates came and went with the seller still unable to convince its mortgagee – Challenger Mortgage – to allow the sale to proceed.
In May 2009 the Mortgagee entered into possession of the property and ordered the O’Neills to vacate.
The buyers found a similar home for the family – at Coombabah, a litte older and with 3 bedrooms plus study as compared to four bedrooms – but at $65,000 more than the Coomera home contract price. They moved in to the Coombabah home in August 2009.
In February 2011, they filed a breach of contract claim against the sellers claiming the extra amount they ended up having to pay for the family home and expenses thrown away: legal fees, storage costs, home rental until the Coombabah home became available.
The court accepted that the substitute home was “another property of like-quality” and that the other losses “flow from the breach of the contract by the defendants”.
By the time the case came before the court on a summary judgment application, the sellers were acting on their own behalf. They did not appear in court to contest the claim when the $75,000 damages plus legal costs of the recovery proceedings were awarded against them.
O’Neill v Brown [2011] QDC 221 Samios DCJ published 30/09/2011
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Yep had this one recently too. Seller told they could not sell by mortgagee. Then mortgagee went into possession and auctioned it. No sale and now it is going to auction a second time. I’ll bet they get less than our our original contract sale price. Another breathtaking variant in the past week was one where a young couple got finance approval, declared finance satisfactory and then bank for some mysterious reason sent in a valuer who put $50k less on it and despite a very detailed and eloquent argument supported by good evidence about the price on my part the bank declined to advance funds and the poor folk lost their deposit.
This or similar situations are going to become more frequent. As sellers pressured by their banks to sell find themselves with negative equity.I have encountered this several times in the last few months, whereby an offer to purchase is made and is accepted by the seller only to have the bank refuse to allow settlement. The sad fact is that in each and every occassion the bank has proceeded to mortgagee sale only to sell the home for much less at auction than the original offer.Then has claimed penalty interest arising from the drawn out auction process,plus advertising , valuers fees,auctioners costs,locksmiths charges. etc.etc.All amounting to an even greater short fall that is loaded onto the poor allready financially stressed vendors.Definitely not fair play.
Ross – the judgment doesn’t always give all the details. We can’t tell when the seller’s default began or whether they had intended to pay the shortfall separately – PC
My first ‘unqualified’ thought on this sorry instance is … shouldn’t there have been a caveat installed over the property (by Challenger Mortgage) stating that any sale is subject to certain conditions being met (?) that could well have avoided many of the problems (as caused), following the sale?
And if so, why hasn’t Challenger Mortgage been held fully accountable for their not doing so, in this instance? Just wondering….