|Home| Info| Community| Business| Beaches| What to do?| Rentals| News| Forum| Blogs| Finance| History| FAQ| Contact|
Buying off plan
Buying off plan
A friend of ours came to visit last year and fell in love with the place.So much so he put a deposit on an apartment and signed the promissory contract .
The apartments are now almost complete but instead of increasing, their valuations have decreased because of the current state of the market.It has now left him with too big a shortfall when applying for his mortgage. He can't complete and will therefore lose his deposit.
Has anyone had any experience of this??? Is there anything that can be done?????? Are developers likely to be flexible ???
The apartments are now almost complete but instead of increasing, their valuations have decreased because of the current state of the market.It has now left him with too big a shortfall when applying for his mortgage. He can't complete and will therefore lose his deposit.
Has anyone had any experience of this??? Is there anything that can be done?????? Are developers likely to be flexible ???
Re: Buying off plan
Not had personal experience. Buying off plan is always a gamble - in better times you probably made money. The market has been falling for longer than last year, so it was a rather unwise gamble. I would get my solicitor to talk to the vender/developer. They may be happy to accept less to get a sale, but they may just want to pocket the deposit.
Re: Buying off plan
other folk will have more knowledge than me on this but I thought that the process was thus;
that you put a (returnable) deposit down when you take a liking to a development off plan; it sounds from what you've said about the drop in prices/ valuation that there's been a considerable time gap between then and now.
When the development is near completion and within sight of getting it's habitation licence the developers firm up all the clients by issuing promissory contracts which I thought gave the deal 60 days to complete. The client can choose not to sign and ask for his deposit back; If after signing the client pulls out the deposit is lost, if the builder breaks any covenants or fails to complete in the 60 days the clients are entitled to claim twice the deposit back.
I'm sure we'll hear different cases but I haven't heard of people signing promissory contracts more than a year before completion, so I'd get your friend to check what he's signed and get a lawyer to examine the contents of the contract.
that you put a (returnable) deposit down when you take a liking to a development off plan; it sounds from what you've said about the drop in prices/ valuation that there's been a considerable time gap between then and now.
When the development is near completion and within sight of getting it's habitation licence the developers firm up all the clients by issuing promissory contracts which I thought gave the deal 60 days to complete. The client can choose not to sign and ask for his deposit back; If after signing the client pulls out the deposit is lost, if the builder breaks any covenants or fails to complete in the 60 days the clients are entitled to claim twice the deposit back.
I'm sure we'll hear different cases but I haven't heard of people signing promissory contracts more than a year before completion, so I'd get your friend to check what he's signed and get a lawyer to examine the contents of the contract.
Re: Buying off plan
hi horsemad ,
perhaps less costly take hit on deposit and walk away, but if the drop in value of the apartment is less then maybe complete and sell and take the loss on that. would have to factor in additional costs in such a scenario. Personally I would talk to builder and hope for a bit of give and take.
perhaps less costly take hit on deposit and walk away, but if the drop in value of the apartment is less then maybe complete and sell and take the loss on that. would have to factor in additional costs in such a scenario. Personally I would talk to builder and hope for a bit of give and take.
Re: Buying off plan
Unfortunately this is not an rare occurence in todays market ( Portugal or the UK ). We know of others who had just had to walk away from their proposed purchase.
What does the builder stand to lose, he has his promissory ( up to 30% of the original price ) and he can now resell the property and afford to give a discount for a quick sale.
Its just the other side of the coin when buyers flipped their properties and made a quick profit on completion.
The moral in todays market there is no need to buy off plan, in fact given the number of stalled developments and builders in trouble it is a big risk.
What does the builder stand to lose, he has his promissory ( up to 30% of the original price ) and he can now resell the property and afford to give a discount for a quick sale.
Its just the other side of the coin when buyers flipped their properties and made a quick profit on completion.
The moral in todays market there is no need to buy off plan, in fact given the number of stalled developments and builders in trouble it is a big risk.
Re: Buying off plan
Thanks guys for the comments.The developer is looking to see what he can do. Thankfully he seems a decent guy.
You are right . Should have seen this coming . Sometimes you have to learn the hard way. he was just blown away .Fantastic apartments in a fabulous spot for holiday lets.
You are right . Should have seen this coming . Sometimes you have to learn the hard way. he was just blown away .Fantastic apartments in a fabulous spot for holiday lets.