Non payment from house sale

47 posts in this topic

We sold one property and bought another. The buyer is making changes and needs planning permission.  This is apparently holding up payment.  Meanwhile we are paying for 2 houses and a bridging loan.  The sale of the house should have left us mortgage free. The buyer is waiting for a letter to authorize payment,  the notary says is down to  the permission being given to knock down a garage. 

I do not see what this has to do with us. These payments are crippling us.

Where can we get advice?

0

Share this post


Link to post
Share on other sites
1 hour ago, Henribear said:

We sold one property and bought another

think you narrowed down people who will provide any substantial feedback there.

 

What if you threaten to put it back on the market? If the sale is not complete, the Makler does not need to be paid, right?

 

But it sounds like the new buyer is making the sale dependent upon the planning permission, which should not be your problem. Give your Makler a swift kick in the ass (always a good recommendation).

 

1

Share this post


Link to post
Share on other sites

What does your sales contract say about when payment is due? Is that date subject to any conditions beyond your control? While that would be legal it would be uncommon.

0

Share this post


Link to post
Share on other sites

We asked that the payment date is by today. The notary has given him till 29th and he had to pay for monies lost through non payment.  Getting this planning was not true so now there is another excuse. We know he is dividing the property into flats and selling them. In fact he already has them advertised.  I suspect he is trying to sell them on architect  drawing before paying us. Now we must wait till 29th

0

Share this post


Link to post
Share on other sites
On 11/9/2019, 6:35:05, Henribear said:

We sold one property and bought another. The buyer is making changes and needs planning permission.  This is apparently holding up payment.  Meanwhile we are paying for 2 houses and a bridging loan.  The sale of the house should have left us mortgage free. The buyer is waiting for a letter to authorize payment,  the notary says is down to  the permission being given to knock down a garage. 

I do not see what this has to do with us. These payments are crippling us.

Where can we get advice?


You do have it regulated in the notarized contract what happens in case of non-payment, don’t you? I sincerely hope the answer is affirmative. In the properties I purchased, the buyer (me) was required to pay a significant penalty in case of non compliance, and the seller as well (compliance in that case meaning failure to vacant the house when agreed). I can’t imagine signing something so critical otherwise.

 

so, what exactly does your contract say?

0

Share this post


Link to post
Share on other sites

So today we were told that there is no payment.  The fine will be 10% of the sale cost plus payment for our costs and stress caused. There is s meeting with the burgermeister on Tuesday.  Apparently the town does not want any more holiday let's. However we are arguing that we sold a large property,  we have nothing to do with its future use. Also the buyer has said he is turning into apartments that he will sell. He has not said that they will be holiday let's. Notary is not happy, nor is estate agent. 

Another point is that when their architect was in the roof of the property he actually put his foot through the ceiling.  This damage must be paid for and repaired.  Watch this space

4

Share this post


Link to post
Share on other sites

Well the buyer has not paid. We are left with paying 2 mortgages and must now start legal action.we can not officially have the old property back yet so we will be forced to put our home up for sale. 

We have to attend a round table discussion but we will take our lawyer with us even though the notary is on our side.

We have been told that solving this can take years. 

We have found out that the buyer had tried to sell apartments based on drawings but failed to get his name on the deeds and therefore complete the sales. 

He walks away. We will end up homeless. This is so wrong

3

Share this post


Link to post
Share on other sites

What a nightmare!

 

In a previous life I worked as a conveyancer in England. There it was common procedure for whole chains of people to sell their previous home and buy the next one all on the same day and the system was set up for it. I've often wondered how it would work in Germany, since I never met anyone who bought and sold simultaneously here. Now I think I can understand why!

 

I really hope it is not as bad as it currently seems and that you can reach a solution at the meeting.

3

Share this post


Link to post
Share on other sites

Hey Henribear,

I think I can potentially help, but I don't fully understand the story. So, please pardon my questions at this stressful time for you (I can only image how tense this is):

 

Overall, I think you need an attorney to explain to your your legal options!

 

1st...regarding your old house: check the contract:

1) I'm assuming you have a purchase-sale agreement (and hopefully you had an attorney draft/review it before signing). Have an attorney check the agreement for conditions that need to be fulfilled before closing; specifically, conditions that would allow your buyer to walk away from the contract penalty free. The planning permission that the buyer wants is not your problem (unless it was included in the contract).

2) Was the contract reasonably written and specifies a date by when closing must occur? If yes, then good.

3) Has the buyer has put up some sort of deposit (escrow) and this amount is deposited in a trustee account (not regular bank account with the Markler) with a 3rd party trustee (bank)? If yes, good.

 

If the closing date specified in the purchase-sale agreement is past, then basically the buyer broke contract. Does your contract specify what the penalty is for the buyer breaking the contract (it should be that s/he looses the escrow deposit)?

 

If the contract does not specify a penalty for not closing by specified date, then the contract is bust. To minimize double payments, immediately put your house back in the market and don't waste time.

 

If the contract does specify damages...you said the penalty is 10% (OK) and payment of your costs  (what costs specifically?) and stress (this is strange...I have never seen this in a contract ). Are these explicitly specified with exact amounts somewhere in your contract? If the penalties are specified in the contract, then it makes no difference in your course of action -- still put your house in the market immediately. If this sale come through then fine, but if not then you're not putting all your eggs in this one basket and wasting time waiting for this buyer. The buyer seems to be  basically stringing you along and getting you to write him a free purchase option.


2nd...check your contract with real estate agent:

1) I'm assuming that the contract states that the real estate agent's services are considered complete when he has found willing and ABLE buyer (able as in the buyer has the money and has transfered it to your bank account). If other words, you don't owe the agent anything until the deal closes.

2) I'm also assuming your contract with the agent is for a limited time...eg 6 months. If you're within this period, I guess you are stuck with this agent. If not, then maybe get a new one.

 

3rd ...bridge loan:

1) The escrow amount/penalty (if any in your contract) I'm assuming will take some time through the courts (if it goes that way) to be settled and hopefully come your way. Ask your attorney how long does s/he think it will take to get your hands on this money, then you can use it to pay the interest payment on the bridge loan.

2) Bridge loans are expensive. So you need to do some math. Ask your agent how long does it take to find a new buyer and close the sales so you can take the proceeds and pay off your bridge loan. Compare interest payments on the bridge loan during the time it would take to sell with the  the house versus the processing costs of getting a regular mortgage. Perhaps, it makes sense to get started on the process of a regular mortgage immediately because who know how long this can take in courts.

 

That's my advice.

 

 

 

 

 

2

Share this post


Link to post
Share on other sites

The buyer did include the planning permission in the contract but we know that was granted. 

I am only taking my husbands word for the 10% compensation.  He may have misunderstood. 

The notary is very upset with the buyer. 

He wants the round table discussion to avoid court.

We are insisting that our lawyer is included.

This is mainly because we do not understand all the legal ins and outs. We want someone fighting our corner.

The marker is trying to please everyone.  He wants his money too.

The bottom line is that we cant afford 2 mortgages.

Tomorrow I will read your message again and take notes.

29th November was the final extended payment date but buyer asked for an extension. 

He was granted this then didn't pay.

Now hes refusing to speak to anyone which solves nothing.

The old house will be the hardest to sell but our home will be snapped up, especially after all the work done on it.

We don't want to lose our home.

I'll keep you posted. There is s phone call being made to us after 11.00 which may make things clearer. Thank you

2

Share this post


Link to post
Share on other sites

If I was you I´d probably stop paying the mortgage for your old house beyond what you can afford. That will at least buy yourself some time and you should be compensated for the financial consequences by the buyer.

1

Share this post


Link to post
Share on other sites

The 10% compensation is not in the contract.  It is a sum that the notary wants him to pay us.

Right now the buyer is being told that we are getting a lawyer to represent us. That we are happy to talk but we will be supported.

As for house payments.  The sale of the other house was to pay for this smaller house , leaving us mortgage free.

I am retired and my husband semi retired but will need to give up work soon.

 

0

Share this post


Link to post
Share on other sites

I am very sorry for your troubles. Buying a house was one of the most stressful times for me and that was with everything going according to plan, with great sellers, a wonderful Makler (they do exist) and a no-nonsense down to earth Notar. Still I didn't sleep well until everything was over. 

 

HenryM gave you some excellent, knowledgeable advice. You could also talk to you bank and see if they have any suggestions. Make sure to mention that the buyer broke the contract and while he will be responsible for the extra money it cost you, you want to minimize the damage. 

In addition, maybe you can sit down with the Notar and your lawyer in the next few days to discuss your options and what may happen. Make sure your lawyer knows your fears and what you need. I don't think at all that you have to lose your house. Don't even think about that until you have explored all the options. 

How good is your Makler? Do you trust him? Talk to him to and get him started on finding a new buyer for the property asap. 

 

Good luck. I am keeping all fingers crossed for you. 

0

Share this post


Link to post
Share on other sites
10 hours ago, jeba said:

If I was you I´d probably stop paying the mortgage for your old house beyond what you can afford. That will at least buy yourself some time and you should be compensated for the financial consequences by the buyer.

 

No! Absolutely do not do this under any circumstances (figures this comment comes from Greece :) ...sorry jeba, just friendly kidding ). You will become a pariah in the credit markets and no one will ever extend you credit again. Perhaps given your life stage this is a risk you might consider worth taking, but I personally think there are better courses of action. If the situation is this desperate then possible options are:

1) talk to the banks, explain your situation, and ask them to restructure the loans. They can potentially increase the amortization of the loan in order to reduce the monthly payment.

2) consider my advice from before:

13 hours ago, HenryM said:

2) Bridge loans are expensive. So you need to do some math. Ask your agent how long does it take to find a new buyer and close the sales so you can take the proceeds and pay off your bridge loan. Compare interest payments on the bridge loan during the time it would take to sell with the  the house versus the processing costs of getting a regular mortgage. Perhaps, it makes sense to get started on the process of a regular mortgage immediately because who know how long this can take in courts.

 

 

OK back to the situation:

1) Very important! Based on the information you disclose I sense you are not clear on what is relevant to the situation and are focusing/spreading your efforts needlessly. Tip:  Focus 100% on what the contract EXPLICITLY says and on what your legal options are, forget everything else. The best person on your side right now will be the lawyer (and me :) ). Everything else from anyone else (notary, agent, etc) will just cause more confusion as they have their own interests in mind.

2) You still have not answered the following important questions: Has the buyer put down a deposit, if yes how much and where is it deposited? And, does the contract specifically state penalties for breaking the contract? Talk to your lawyer and see if you can get access to this money to help you make the payments for a few months until the situation resolves.

 

3)

12 hours ago, Henribear said:

The buyer did include the planning permission in the contract but we know that was granted.

Ouch! Not good that this is in the contract (if I was advising you on this transaction, we would have had a long talk about allowing this clause to be included). Anyway, this doesn't help now.

OK so the situation now stands as follows: You claim the clause condition (planning permission) has been contractually satisfied (you say it was granted, but can you prove it?), but what does the buyer say?

 

Basically, you are trying to show that the buyer broke the contract, and based on what you said so far a lot of it will depend on how the contract was written/worded (your really need to sit down with attorney to understand your situation). HOWEVER,  this exercise is useful only if the contract specifies penalties for breaking it (hopefully, the deposit I keep asking about).

 

4)

12 hours ago, Henribear said:

We are insisting that our lawyer is included.

Probably best idea in here, but first before starting negotiations I would actually sit down with the lawyer 1on1 to understand the options.

 

 

5)

12 hours ago, Henribear said:

29th November was the final extended payment date but buyer asked for an extension. 

Based on info you've said so far, I would absolutely not grant this.

 

Good luck. Feel free to message me privately.

2

Share this post


Link to post
Share on other sites

Go and talk to the bank and discuss this as soon as possible.

 

Get them to change your payments, reduce them, either for a time or longer (e.g. extending the mortgage to a longer period). This will take the major issue off here. You might have to give increased surety.

 

Other options are to rent out the old house immediately with possibly a defined period with possible option to continue, based on covering a legal fight period and getting them out for a new buyer. 

3

Share this post


Link to post
Share on other sites
17 hours ago, HenryM said:

I think I can potentially help, but I don't fully understand the story.

 

Why do you think you can help the OP? Are you a lawyer?

1

Share this post


Link to post
Share on other sites
3 hours ago, black1 said:

Go and talk to the bank and discuss this as soon as possible.

 

Get them to change your payments, reduce them, either for a time or longer (e.g. extending the mortgage to a longer period). This will take the major issue off here. You might have to give increased surety.

 

Other options are to rent out the old house immediately with possibly a defined period with possible option to continue, based on covering a legal fight period and getting them out for a new buyer. 

 

I totally agree with that.  Before getting into the situation that you are delaying payments for the mortgage or for other bills because you can't handle it, you need to talk to the bank, tell them your situation and ask for another payment plan that you can handle.  

 

Banks may not be happy if you can't pay in full but they are definitely happy to be told about it beforehand and most are willing to work with you to set up a plan that you can stick to.

 

3

Share this post


Link to post
Share on other sites
40 minutes ago, Metall said:

Why do you think you can help the OP? Are you a lawyer?

Significant experience in this area. Not a lawyer though.

0

Share this post


Link to post
Share on other sites
53 minutes ago, HenryM said:

Significant experience in this area. Not a lawyer though.

 

Significant experience in Gemany?

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now