Be careful what you sign for…

Purchasers who signed up to buy new properties "off-plan" during the property boom are counting the cost of a hasty decision. 

By signing on the dotted line during the good times they are finding themselves the subject of legal wrangles, out of court settlements and judicial decisions.  Some recent cases have shown the law to be on the developer's side where a legally binding contract was entered into, even where the purchaser is no longer in a position to buy the property.  Most recently, it has been reported that 4 purchasers who signed up to buy apartments in the Woodlands Manor Development have agreed to pay the difference between the price at which they originally agreed to buy apartments and the price the developer may now be able to secure in the current market, in an effort to be released from the binding contract to buy.  In the interim period the apartments will remain the property of the Developer.  The unlucky purchasers have also agreed to pay the Developer's related costs for the action taken against them.

In another high profile case, the Developer of the Ormeau Bakery apartment complex in South Belfast recently succeeded in obtaining a court order to force purchasers to complete at the price and terms that were agreed at the height of the boom in 2007. 

Caution should be applied before agreeing to sign any document.  It should be borne in mind that legally binding contracts may be enforced in some circumstances, even where funding cannot be secured.  It is not uncommon for holding deposits or indeed contractual deposits to be retained by vendors and it seems action is now being taken to obtain balance sums at the original price agreed during the boom.  All clauses should be reviewed and assessed in detail to be sure you are aware of the potential risks and costs attached to the documents you are signing.

Should you be considering a residential property purchase and would like some more information please contact the residential conveyancing team at Carson McDowell.  The residential conveyancing team can draw upon the Carson McDowell litigation team who have acted on both sides of similar transactions.

Wendy Carberry
Assistant
Carson McDowell