Flat Chat Strata Forum Buying and Selling Current Page

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  • #9595
    Goose
    Flatchatter

      Hi Flat Chat,

      In July 2013 my fiance and I entered into a contract to purchase a 3 bedroom, 2 bath, 3 car spot apartment for what was probably expensive then.  The internal space was 108 sqm plus 138 external (very large, but that was the appeal to us). 

      This month we received a letter from the vendor advising that the strata plan was changed and that our apartment basically no longer exists.  We have the option to rescind the contract for no compensation. The reason given was so that the apartment block complies with Council approval requirements.

      After doing some digging, we found what we believe to be council’s original conditional approval requiring more 3 bedroom apartments in the complex.  They even suggested that the developer could convert a 2 and 1 bedroom unit into a 3 bedroom unit.

      It turns out that the space my apartment was meant to occupy has been turned into 3 separate apartments, while the space above my terrace converted to two more apartments (none of which are 3 bedroom places!).  5 apartments would definitely be worth more than what I have paid for the 3 bedroom.  In place of my original apartment, the lot number in my contract now corresponds to a tiny 2 bedroom unit a few floors below with no large terrace… obviously I have no choice to rescind.

      The Council application to put through this change was lodged in December 2013, so they have known about it for a while (but not told me).  It feels like to me that the developers have misused the rescission clause in the contract to allow alter the plans above and beyond what Council originally intended this to capitalise on the increase in property prices. 

      I am now left out of pocket for cost of the bank guarantee and legal fees, and lost out on the capital growth in the market.  I feel like the developers were misleading and deceptive, and did not negotiate in good faith.

      My legal advice is to walk away and wear the loss because of the cost of legal action.  This doesn’t sound right that a developer can so blatantly profiteer.

      My fiance and I were looking forward to moving in and have been doing site visits to check on the progress.  We are very disappointed and planned to use the large balcony for our wedding next year. 

      What are your thoughts?  Is this common practice?

       Angry and disappointed!

      Specific references including a link to a Newspaper Article, the Developer, the Builder, and the Property Address (inner city – Sydney) have been removed without in any way altering the tenor of the post. (Whale)

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    • #21945

      @Goose said:
      What are your thoughts?  Is this common practice?

      I know someone who paid a deposit of $8000 for two off the plan apartments. The builder ended up becoming bankrupt and this person lost their deposit and didn’t get to own the apartment they thought they would eventually own.

      This event occurred about 10 years ago meaning that the $8000 would be worth more now.

      So I think you are in a better position than these people …

      #21956
      g
      Flatchatter

        You will need to carefully read the contract, It would be common for the developer to have some sort of an “out” if they were forced to make changes.

        I would be pushing for as much as possible, depending on what the contract says. Even if the contract simply says that they have to refund your deposit, I would be claiming interest, and possibly losses due to the lengthy time between the change and them notifying you.

        #21967
        EdwardThirlwall
        Flatchatter

          Really sorry about what happened and I hope it works out for you. Aren’t there normally some clauses on how investment apartments like this work. I’m sure the developers have some funds in storage if not they wouldn’t have put the units out to sale anyway. At the end of the day, if takeup rate isn’t enough, then they should make it very clear in their contracts.

          #21979
          Goose
          Flatchatter
          Chat-starter

            Hi all,

            Thanks everyone for your responses.

            Unfortunately I feel like there is not much I can do from a legal perspective unless I want to engage a property lawyer and litigate etc.

            I would have understood if they were FORCED to make changes to satisfy council.  That’s the risk you take with off the plan.  Developer going broke is also one of those risks you take, which is why I researched developer/builder.  “Built”, the developer/builder, had a seemingly great reputation.  They completed the LV store in Sydney, Park Hyatt refurbishment, the Ferrari dealership in Zetland etc.  I wouldn’t have gone with a developer/builder which hadn’t had a good reputation. 

            After some digging, I’ve found that they were not forced to make changes.  The George and Allen complex had already been approved by Council at the time I purchased the apartment.  The contract permitted changes to the plans that were required by Council… which were not really applicable in my case here. 

            What has become very obvious is that the timeline doesn’t stack up.  Personally, I don’t think they ever intended to build the apartment which they sold to me.

            When I bought off the plan: July 2013

            First question by Built to Council to add 9 extra apartments: October 2013

            Construction started i think sometime in November 2013

            DA submitted to add the apartments: December 2013

            DA with the extra apartments approved: May 2014

            When i was told: July 2014

            A year had elapsed until I found out that my property wasn’t being built.  Meanwhile, prices went up 15% (ABS numbers) and I have to look for a new place.  That and all the legal and bank guarantee costs incurred. 

            I guess buying off the plan, you’re only getting as good as the developer’s word and it’s about trust.  I would not trust Built again.

            #22625
            Anonymous

              Man! I’m really sorry for all that you had to go through with this. I can only imagine how devastated to have your heart set on moving in to be told by these buggers that it isn’t possible. The managements should really do something about all this legislation and protection of buyers when it comes to purchases and housing agreements. Like you said – it really doesn’t seem fair that they can just manipulate the rules to be in their favour when it makes things so much more difficult for us! 

              #22626
              bcr83
              Flatchatter

                Sorry to hear and hope it works out for you…Just count yourself lucky it wasn’t worse with a loss of cash or potentially lumped with a building full of defects.

                Buying into my first property I’ve been burnt too..

                Builder declared bankruptcy (which I later found is common practice) as such there are significant defects in my building and with no insurance or coverage the owners corp are up for extensive rectification costs. 

                As such I am up for approx 50-60k remediation costs and over a year of stalling to get the work done. I would do a significant amount of research before buying an apartment next time round, all strata reports, building inspections came up fine, yet the building has developed significant issues..

                I find the consumer protection laws have massive holes with regards to this, everyone knows it goes on but just let it go.

                 

                Goodluck and hope it works out for you

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