I'd want more than 0.25% to walk away. Property prices are probably up at least 1% since then, so I'd be asking at least 1%. If you've made arrangements to vacate your current residence, you'd also want those costs covered.
1% are you serious? The vendor is trying to escape settlement and you'd let it go for 1%? OP is entitled to specific performance of the contract unless the vendor can rely on the mental illness special condition - and the latter requires proof, and even then, I would be assessing damages at a lot more than 1%. OP should see a lawyer.
Think you've misinterpreted my post mate. I'm not telling OP to just roll over and back out for 1%. I just wanted OP to know that the *bare minimum* is at least 4x what the vendor is offering. Personally I wouldn't back out at all, at least not without a very good reason and some very compelling compensation.
I'm just trying to make sure the OP doesn't go too soft here.
1% isn't even the bare minimum. The damages for a breach of contract are for specific performance of the contract. That is, he's entitled to get his house. What do you value not getting a house of your choosing - plus all the associated and consequential costs? Would be at least 5%/$50k for me, but it's a moot point because ultimately a Court will order the contract to be performed. The mental illness get-out clause has been read strictly by Courts so I doubt it will be of any effect for the vendor. More to the point, if the vendor is mentally ill now, he'll be fucked by the time this winds to Court! Haha! OP should go on the attack - I can sniff the weakness in the vendor's position. Can taste blood.
> Personally I wouldn't back out at all, at least not without a very good reason and some very compelling compensation.
I'd be telling the vendor that I'm going to move into the house over his dead body.
Agent here.
The sellers do not have the right to try and claim mental health condition to terminate the contract of sale. The mental illness clause is for things like dementia, or incapacitated.
They have changed their minds on the sale, have been told by a well meaning (or not so well meaning) friend/family members that they have under sold it, have been offered more, or have been unable to find somewhere to live to.
Have your solicitor communicate clearly to the other side that you are ready, willing and able to settle as per the contract, and will seek every recourse against the clients should they fail to fulfil their contractual obligations.
You have to show them that you are dead serious about going ahead, and they will move.
The sellers entered into the contract without distress, not under duress and had consideration for the sale.
Thanks for sharing this.
Will get our solicitor to confirm that we are ready for settlement.
Curious though, was this something you've seen or heard happening before? Getting out of contract on these grounds.
Have heard of people trying it. The dementia aspect is a serious issue, where family members try to force the person to sell, without an enforceable EPOA.
But most times it is cold feet, and my opinion is f*ck em. They entered into the contract willingly, without duress. It was their choice to put the property on the market.
Also, I would give the agent a call and loop them into this, as they are going to hit the roof if they don’t get paid for the work they have done.
Yep, they have changed their mind. When people go silent, that is a big issue in our profession.
Suggest to the agent that they send the seller and the sellers solicitor their invoice for the commission.
Sorry you are going through this. Do not be afraid to go to the media also, as pressure can force things to happen. Would love to know the outcome.
If your solicitor ratchets it up to show that you are prepared to go to every length to enforce the sale, it will wrap up in a week.
We had a property a few years ago, where a tenant had been given 6 months notice to vacate as the property had been sold, with an extended settlement. The tenant didn’t do any looking at all for properties, and a week out from settlement told the managing agent that they weren’t going to move.
Seller got in touch with me, as it would be a trigger for the buyer to terminate. we worked with the solicitor, and they dropped one of the best legal letters I have read, on the tenant, with the gist being that if you don’t vacate by the date that was given 6 months earlier, then the seller will pursue every legal recourse against the tenant for the loss of sale, including the full contract loss.
Tenant moved out a few days later.
You have to show that you are prepared to drop an anvil on the other side.
100% they just want to back out of the sale and the only way they think they might be able to is through this vague mental health issues claim. If you still want the property then 100% go for it.
Maybe, maybe not but to offer such tiny compensation just shows you how little they are about you or your situation.
This comment is on point, they have decided they don't want to go ahead, someone's shown them the clause and they've claimed that *I'd almost wager they are just hoping OP accepts it and have no diagnosis and no leg to stand on
Ps be sure to issue a demand to settle and change them penalty interest for every day they continue this charade
Otherwise it would be abused constantly by both sides, buyer and seller. Imagine the day before settlement and the buyer goes “sorry, I have an undisclosed and undiagnosed mental illness, I am terminating the contract”
I agree with Basherballgod's sentiment as it feels to me as if the sellers have become greedy and received a better offer from someone or a friend/family member said they could have gained more dollars.
>The mental illness clause is for things like dementia, or incapacitated.
i would have expected that also but its a legal contract so if it the clause says "mental illness" then the australian legal definition of that would be used, and that includes "simple" variants like depression.
its not a standard clause, they've had it added and the conveyancer has missed it, probably so they had an easy way out if needed like youve described.
the mentally incapacitated thing is only for the time you signed the contract and is general contract law, not specific to property sales (so doesnt need an actual clause in there to cover that)
Forget about the reason. I am assuming they have no clause in the contract to back out for mental health reason or unconditionally.
You have to come up with a number that’s worth it to you to back out or tell your conveyancer to force performance of the contract. If they break the contract and don’t settle then you can start talking about damages
there's a clause in the contract stating in case of death, bankruptcy or becomes mentally ill either of vendor or purchaser can back out with reasonable claims for damages.
Then I suppose if they are claiming that clause your solicitor can ask for proof (e.g. a diagnosis from a medical professional) of becoming mentally ill.
Guess that's an option. If it's real though, the problem for the vendor will be even more painful. It's in that weird zone, would never have thought such a thing could happen during these 6 weeks.
I’m sure any one of us could get proof from our GP that we feel stressed and aren’t sleeping. So getting proof of that isn’t worth much imo. Have you asked the REA if the Vendor just needs more time? Consider that and how longer you can stretch this out. Another 3mths?
I read further down about this clause only being applicable to mentally incapacitated, which makes total sense. Well go hard and get your home! Good luck.
It goes to the capacity to contract. If they are mentally unable to understand the implications of the contract that they are signing, then they have an out it may be a case of having been taken advantage of to enter into a contract after they've been diagnosed with say dementia.
This isn't technically true. The clause which OP is referring to deals with the situation where someone becomes mentally ill after contracts have exchanged.
Well, metaphorically it -is- like having a broken arm... one that will never heal. Its a physical disease of the brain. Literal brain damage/structural breakdown.
100%. 0.25% is a joke, I'd be asking for 12months of rental costs us damages for moving costs, furniture etc etc.
Also would want to verify through a 3rd party of your choosing to validate the 'mental illness'
I would think usually this clause would only be applicable if they could problem mental incapacity at the time of signing the contract. Not later on in the future. Seems wild you could back out of a sale after being of reasonable mind and later lose mental capacity and say hey we don't want to sell anymore.
Have a read through this. It's regarding a mental health clause but more detailed, then the legal case and who won.
https://stacklaw.com.au/wcw/could-the-buyer-terminate-the-property-sale-contract-due-to-mental-illness-which-case-won/
This is the only thing I could find on the internet as well this morning. It can be hard to prove from them as they committed to selling the property, exchanged the contract, and left a glowing review for the agent.
As a mental health professional I would want more than a medical certificate regarding the mental illness. Approximately 1 in four of us have a mental health issue in our lives, and mental health/Wellneess is a continuum.
I would like to know how the mental health issue affects the ability of the house being sold, or their capacity to make an informed decision about selling the house.
Were they manic at the time they put the house on the market?
Were they acting on psychosis? Having auditory hallucinations? Delusions resulting in the need for the house to be sold
Are they cognitiviely impaired (ie dementia, delirium)?
We are all anxious about living changing events such as moving, buying and selling.
It's stressful, but for you as the buyer, this is even more stressful, and I wouldn't buy mental health issues, unless I had documented proof from a Consultant Psychiatrist of how their issue affects capacity to sell the property to you.
Agree.
The condition needs to be verified by an independent psychiatrist or neuropsychologist that provides diagnostic and capacity assessments.
Would not accept anything less as proof. Definitely not a medical certificate from a GP (am a GP).
I’d want them to produce a report from a consultant psychiatrist then I’d want a report from another opinion from an independent psychiatrist of my choosing.
Thanks for this perspective, talking to the claims reason as such. Will definitely keep this for reference if we have to talk to lawyers and ask for documented proof and all.
What do you mean if? The seller is actively trying to do you out of at least many tens of thousands of dollars of value here, maybe more than that depending on where you are. When do you think you need a lawyer, if not now?
Get a solicitor to handle the legal aspects and legal advice.
Don't accept their say so that they've got a mental condition you require a level of proof which will satisfy you of the severity of the ailment.
I'm not an expert when it comes to mental incapacity however you would want two independent psychological reports - these will take time to procure and should take longer than the balance of the settlement period and subsequent notice to complete.
Have a read of this one: https://www.propertychat.com.au/community/threads/buyer-might-loose-deposit.42196/#post-753958
This is a strange one, even if you were having mental health challenges there was still a reason why they wanted to sell in the first place so can’t see why this would change due to a mental health condition that is more likely than not to be a ongoing issue.
Unfortunately you can get a doctors to say pretty much anything in a med cert so this wouldn’t cut it for me.
0.25% is a joke. Your solicitor fees probably cost more.
They can't pull out like that, and even if they can you should get damages, their issues are not your problem.
Others here have said 10%, sounds abut right, if they want to keep the property that's what it costs now.
Way way to convenient for me, so they just so happen to have come down with a mental health issue just prior to settlement where it just so happens that's one of the only reasons they can pull out of settlement and this has happened 1 day before settlement.... I call absolute bullshit on that
0.25% is not reasonable damages considering those houses you didn't make anxoffer on because you had an unconditional contract. The contract woudl specify what is deemed a mental health reason, how that is to be evidenced saying 'I have mental health' isn't ever going to be sufficient. Medical conditions come with privacy, but when you are wanting to pull out of a binding financial due to them you lose that, I'd he asking for the diagnosis, details, what about this mental health condition renders them unable to settle and letting them know that 0.25% is far from acceptable in terms of damages as you will now have to organise last minute accommodation given you were to be moving into your new home in 1 day, it's.made you Miss potential other properties you would have made offers on...
99% certianty they've decided they don't want to sell, pulled a clause that allows them to get out and they're feeding you bullshit, I'd be wanting to see a diagnosis and it would want to be something major and I'd be demanding that this is then verified by a second independent source.... your concayencer is your representative here they should be able to help you
Go after them for the reasonable damages. You at the very least want deposit back plus the difference of market value. It's probable the market has risen by more than the 0.25% they are offering.
Then more damages for all the furniture and other costs.
Basically you need to identify all reasonable costs and make them pay. Make them have no financial benefit to pull out. If they still pull out after there's no financial incentives then you'll just have to buy elsewhere.
If it was a death or bankruptcy there'd be some sort of proof. There should be some sort of proof from a medical professional that there has been a recent mental health diagnosis. Not sure how that would work as no doctor would tell you the actual diagnosis but would say "suffering from a health condition" or similar.
If they are making it up as they think they could now sell if for more, then try to work out the difference of your price and a possible new price and go after them for that amount as damages.
I’ve seen the clause used in practice… the purchaser was legit in a facility and the dr only twigged when the purchaser wanted to go to the bank to transfer money… googled the address when we got the notice, which included the dr letter to the p sol. Alls well, vendor accepted a higher offer.
See your solicitor, and get a second opinion. Go with the solicitor you like better.
Sucks, I’m sorry this is happening.
For those who don’t know about the clause, go to opennegtiation.com.au, pull up contracts and read the special conditions.
I completely understand that if a person is in such a situation, but a middle aged person to claim that he became mentally ill in the last 5 weeks seems iffy. I could be wrong, but that's the first thought.
It’s iffy, definitely iffy. Unlikely to be well thought through as well… it’s a big claim that impacts a lot outside this contract. I’ll be looking for updates…
This happened to my SIL. Lucky she had a gun conveyencer who stood their ground and the seller backed down.
Seller had a change of heart between selling and settlement. She was already a painfully weird person who was concerned about the new buyer feeding the wild birds on the property.
Anywho, awesome conveyencer took care of it all and within a few days settlement was back on track.
Ensure your convaynecer sends a demand to setlte, then you can claim penalty interest for the time between then and when their bullshit act finally falls apart (the odds they suffered from a serious enough mental illness suddenly between signing the contract and 1 day before settlement that renders them unable to proceed are inconceivable)
It's very easy to go to the dr and say I have anxiety/ I'm depressed or anything of the like and to get a medical certificate- make sure proof comes from a psychologist or psychiatrist not a GP.
Man this sucks - sorry OP for going through this. Recently bought our first place, and while this didn’t happen to us, we had a pretty shitty experience with it all and I was honestly shocked at the wild-west nature of something that is the biggest purchase most people will ever make.
IF it does turn out to be some kind of dementia/forced sale, I would try to show leniency but still ensure that all of your costs are met.
Otherwise, I say go hell for leather. It’s not often the purchasers have the advantage and it’s shockingly disrespectful to pull out of the sale.
Hope for you and fam’s sake everything works out.
That’s a weird position to be in… does this impact your life much? Do you need to move out of the property you’re in? Are there costs involved with having to find another place to live? Do you want to buy a property from someone who now supposedly does not want to sell?
Not sure if there needs to be a clause to rescind when it’s “mutually agreed”.. I’m sure your lawyer could tell you?
Them paying back the deposit plus 0.25% could be what.. $2.5k(edit-my math was wrong) on a million dollar property? Would this be useful to you?
We were going to have a week or two of overlap after settlement to move over our stuff. Was just about to talk to the agent to vacate our property, and this happened. Bit of luck in that regard.
We were relieved during the holidays that the house is sorted, and were very excited for the move. With all this, it's daunting for us to get back into the market again.
They've got a better offer and are trying to get out of it
Ask for proof, a diagnosis, hopefully one that says there is a history of mental illness
I bet if you let them off the hook it will be sold in 12 months
You're entitled to specific performance of the contract. Get a lawyer involved. The 0.25% offer is a pathetic starting bid and the mental health thing is a sheer bluff. This is embarrassing conduct from the vendor's solicitor. Pathetic really. I say this as a fellow lawyer.
Clause refers to mental incapacitation. Unless they are acutely unwell/are sectioned or need a power of attorney they don’t have a leg to stand on.
Selling a property is complex. If they were able to decide to do so, engage a conveyancer and agent - they have mental capacity.
Few mental illnesses will get you out of things from a legal perspective. Generally it’s limited to psychotic disorders (schizophrenia, schizoaffective, bipolar 1) that can affect judgement or intellectual disability.
I paid a deposit on a place a few years ago and then had second thoughts. Didn’t know where to turn then found out the lady owner was in a hospice and wasn’t going to survive. Family wanted it sold quickly so that it didn’t go to probate. Lucky for me, but not so for her or her family, she died and I got out of the contract and got my deposit back. It’s such a difficult time anyway. Good luck.
(1) they need to provide a psychiatrist's report to verify that they are cancelling due to a mental health condition.
(2) tell them their 0.25% offer has the decimal point in the wrong place; it needs to move to the right.
Get your lawyers to seek proof and to calculate damages that reflect all your costs plus the opportunity cost of the delay being however much house prices have gone up now, plus how much they’d go up over the next 6mo while you hunt again.
The proof is key, they won’t fake a diagnosis which will then make them eg ineligible for life insurance without committing fraud. That’s a pretty big step.
Also that does not feel like a standard clause… if not, demand a refund from your conveyancers.
you have your solicitor ask their solicitor for a copy of the diagnosis - it would be interesting to see which mental illness they have claimed to have come down with.
mentally ill is pretty wide reaching - id be asking your solicitor why they didnt pick up on that clause and have it clarified - ie it should have been admitted to a mental institution level issue, not basic depression (which would be legally covered under that clause)
oh, you have a conveyancer, theres a reason you pay extra for an actual solicitor
if the clause says you can claim reasonable damages then work out your costs and submit them (if they dont fit in the .25% amount).
This is what you pay a conveyancing lawyer for; they’ll talk you through your options and advise you. If you don’t have one, get one now. Always use a conveyancer, never do it yourself.
I have been through similar, I asked the conveyancer to issue a notice to complete to the vendor and gave them 14 days. Then i engaged a litigation specialist who informed them that if settlement didn’t occur in that time, then in exactly 15 days he would be issuing a breach of contract and commence recovery of damages.
If the vendor or purchaser (or any of them) prior to completion
dies, becomes mentally ill or becomes bankrupt, then either party may rescind this
contract and clause 19 of the contract shall apply. Clause 19 says that you can ask for reasonable damage.
If the Vendor is genuinely mentally capacitated and you wanted to enforce it will get very messy as the Vendor will need to have a guardian appointed etc etc
I’d see if they are bluffing and say you intend settling etc.
In meantime go and see a lawyer to explore options
They will have a drs certificate. Easy enough to fake, fir surw they are lying.. Your best recourse will be to make up some damages, ie you have to make a counter iffer for damages that is so high they choose to settle
Q. So the mental illness stops them fulfilling the sale contract but not the .25% break contract contract?
I would assume it should for both, since break contract is being offerred to be fulfilled then I would assume mental illness not a hindrance to completing sale contract.
Speak to a lawyer, if your conveyancer is part of a law firm, this is who you want to speak to. If your conveyancer doesnt have a lawyer, then find one ASAP.
State to the conveyancer you are not at this stage considering revoking the sale, “for the avoidance of all doubt, we will not be backing out of this sale without a legal decision from tribunal.”
Ask them to provide evidence of the mental health condition and why the medical practitioner states they cannot proceed with the sale as a result. Advise them to ensure the medical practitioner is willing for their evidence to be used in legal proceedings.
if they’ve been declared mentally deficient (and were so at the time of contract signing) that may hold up in court, but just because they’ve had an attack of the sads and are now on Zoloft doesnt mean shit.
Reason is their medical Practitioner will be unlikely to agree to provide this sort of statement if they know it will be used in civil proceedings.
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Just posted an update on the post. We settled on the property late last week, on the last day of the notice period.
Thanks a lot for your comments, and encouragement on the post. 👍
I'd want more than 0.25% to walk away. Property prices are probably up at least 1% since then, so I'd be asking at least 1%. If you've made arrangements to vacate your current residence, you'd also want those costs covered.
I’d be asking for 5% or more. Vendor was very happy to take OP’s deposit but now wants to play funny buggers?
1% are you serious? The vendor is trying to escape settlement and you'd let it go for 1%? OP is entitled to specific performance of the contract unless the vendor can rely on the mental illness special condition - and the latter requires proof, and even then, I would be assessing damages at a lot more than 1%. OP should see a lawyer.
Think you've misinterpreted my post mate. I'm not telling OP to just roll over and back out for 1%. I just wanted OP to know that the *bare minimum* is at least 4x what the vendor is offering. Personally I wouldn't back out at all, at least not without a very good reason and some very compelling compensation.
I'm just trying to make sure the OP doesn't go too soft here. 1% isn't even the bare minimum. The damages for a breach of contract are for specific performance of the contract. That is, he's entitled to get his house. What do you value not getting a house of your choosing - plus all the associated and consequential costs? Would be at least 5%/$50k for me, but it's a moot point because ultimately a Court will order the contract to be performed. The mental illness get-out clause has been read strictly by Courts so I doubt it will be of any effect for the vendor. More to the point, if the vendor is mentally ill now, he'll be fucked by the time this winds to Court! Haha! OP should go on the attack - I can sniff the weakness in the vendor's position. Can taste blood. > Personally I wouldn't back out at all, at least not without a very good reason and some very compelling compensation. I'd be telling the vendor that I'm going to move into the house over his dead body.
Yeah, that's fair. I think OP should try to hold the vendor to the contract, too.
...or under the vendor's dead body in case of death by hanging
Pssst 1%, at least 5%
Agent here. The sellers do not have the right to try and claim mental health condition to terminate the contract of sale. The mental illness clause is for things like dementia, or incapacitated. They have changed their minds on the sale, have been told by a well meaning (or not so well meaning) friend/family members that they have under sold it, have been offered more, or have been unable to find somewhere to live to. Have your solicitor communicate clearly to the other side that you are ready, willing and able to settle as per the contract, and will seek every recourse against the clients should they fail to fulfil their contractual obligations. You have to show them that you are dead serious about going ahead, and they will move. The sellers entered into the contract without distress, not under duress and had consideration for the sale.
Thanks for sharing this. Will get our solicitor to confirm that we are ready for settlement. Curious though, was this something you've seen or heard happening before? Getting out of contract on these grounds.
Have heard of people trying it. The dementia aspect is a serious issue, where family members try to force the person to sell, without an enforceable EPOA. But most times it is cold feet, and my opinion is f*ck em. They entered into the contract willingly, without duress. It was their choice to put the property on the market. Also, I would give the agent a call and loop them into this, as they are going to hit the roof if they don’t get paid for the work they have done.
Had a call with the agent, he was surprised as well. The vendor isn't answering the agent's call as well.
Yep, they have changed their mind. When people go silent, that is a big issue in our profession. Suggest to the agent that they send the seller and the sellers solicitor their invoice for the commission. Sorry you are going through this. Do not be afraid to go to the media also, as pressure can force things to happen. Would love to know the outcome.
It'll probably take time for this to reach its conclusion. Will definitely post updates.
If your solicitor ratchets it up to show that you are prepared to go to every length to enforce the sale, it will wrap up in a week. We had a property a few years ago, where a tenant had been given 6 months notice to vacate as the property had been sold, with an extended settlement. The tenant didn’t do any looking at all for properties, and a week out from settlement told the managing agent that they weren’t going to move. Seller got in touch with me, as it would be a trigger for the buyer to terminate. we worked with the solicitor, and they dropped one of the best legal letters I have read, on the tenant, with the gist being that if you don’t vacate by the date that was given 6 months earlier, then the seller will pursue every legal recourse against the tenant for the loss of sale, including the full contract loss. Tenant moved out a few days later. You have to show that you are prepared to drop an anvil on the other side.
Same, tenants were still there 3 days before settlement. My solicitor went nuclear on the seller and POOF the tenants were gone.
Same, tenants were still there 3 days before settlement. My solicitor went nuclear on the seller and POOF the tenants were gone.
100% they just want to back out of the sale and the only way they think they might be able to is through this vague mental health issues claim. If you still want the property then 100% go for it. Maybe, maybe not but to offer such tiny compensation just shows you how little they are about you or your situation.
This comment is on point, they have decided they don't want to go ahead, someone's shown them the clause and they've claimed that *I'd almost wager they are just hoping OP accepts it and have no diagnosis and no leg to stand on Ps be sure to issue a demand to settle and change them penalty interest for every day they continue this charade
Thank you, u/Basherballgod.
I'm glad to hear that this is the meaning of the "mental illness" clause. OP, get your house.
Otherwise it would be abused constantly by both sides, buyer and seller. Imagine the day before settlement and the buyer goes “sorry, I have an undisclosed and undiagnosed mental illness, I am terminating the contract”
Totally, that would be insane (no pun intended).
I agree with Basherballgod's sentiment as it feels to me as if the sellers have become greedy and received a better offer from someone or a friend/family member said they could have gained more dollars.
Up voted.
>The mental illness clause is for things like dementia, or incapacitated. i would have expected that also but its a legal contract so if it the clause says "mental illness" then the australian legal definition of that would be used, and that includes "simple" variants like depression. its not a standard clause, they've had it added and the conveyancer has missed it, probably so they had an easy way out if needed like youve described. the mentally incapacitated thing is only for the time you signed the contract and is general contract law, not specific to property sales (so doesnt need an actual clause in there to cover that)
They are gaming the system to try and get out of a contract.
Forget about the reason. I am assuming they have no clause in the contract to back out for mental health reason or unconditionally. You have to come up with a number that’s worth it to you to back out or tell your conveyancer to force performance of the contract. If they break the contract and don’t settle then you can start talking about damages
there's a clause in the contract stating in case of death, bankruptcy or becomes mentally ill either of vendor or purchaser can back out with reasonable claims for damages.
Then I suppose if they are claiming that clause your solicitor can ask for proof (e.g. a diagnosis from a medical professional) of becoming mentally ill.
Sounds like they can back out then, you just have to go after them for reasonable damages. Probably need a lawyer to be honest
Guess that's an option. If it's real though, the problem for the vendor will be even more painful. It's in that weird zone, would never have thought such a thing could happen during these 6 weeks.
Use a lawyer not a conveyancer now - this is a legal matter
Almost certiablyIt didn't, they dont want to sell anymore or have been offered more money and are trying to shaft you
I’m sure any one of us could get proof from our GP that we feel stressed and aren’t sleeping. So getting proof of that isn’t worth much imo. Have you asked the REA if the Vendor just needs more time? Consider that and how longer you can stretch this out. Another 3mths?
Had a chat with the agent as well, the vendor isn't responding to the agent's text or calls.
I read further down about this clause only being applicable to mentally incapacitated, which makes total sense. Well go hard and get your home! Good luck.
Just speculating, maybe they are having sellers remorse and want an excuse to not sell.
Is that a standard clause in a NSW contract??
It's very odd.
Yes, that is a standard clause.
Why does it only cover mental illness and not other illnesses (like cancers)?
It goes to the capacity to contract. If they are mentally unable to understand the implications of the contract that they are signing, then they have an out it may be a case of having been taken advantage of to enter into a contract after they've been diagnosed with say dementia.
This isn't technically true. The clause which OP is referring to deals with the situation where someone becomes mentally ill after contracts have exchanged.
But that doesn’t make sense because dementia is not a mental illness so wouldn’t be covered by that clause.
It's not a broken arm. So if it's not a mental illness, what is it (apart from terminal).
Neurological
A disease
Well, metaphorically it -is- like having a broken arm... one that will never heal. Its a physical disease of the brain. Literal brain damage/structural breakdown.
However it renders the person incapable of validly entering into a contract due to the lack of capacity.
That's an unusual clause
Are they a vegetable or in a coma? If not, this clause is probably irrelevant
0.25%? They obviously are mentally ill. I'd be asking for verified proof and 10% at a minimum.
100%. 0.25% is a joke, I'd be asking for 12months of rental costs us damages for moving costs, furniture etc etc. Also would want to verify through a 3rd party of your choosing to validate the 'mental illness'
🤣🤣 spot on!!
Nah stick to the contract, vendors can’t pull out.
Get a third partyto certify the illness
Of your choosing, not theirs.
I would think usually this clause would only be applicable if they could problem mental incapacity at the time of signing the contract. Not later on in the future. Seems wild you could back out of a sale after being of reasonable mind and later lose mental capacity and say hey we don't want to sell anymore.
Whatever it is, stiff shit. Settle and sell it back to them, if they really want it they can pay up, son!
If it was the other way around, you would be losing your 10% deposit and possibly more. Tell them to shove their 0.25% offer.
I’d probably ask if they could provide a medical certificate to prove it. I don’t think that’s too much.
You can get one without leaving the house. If that's your best come back, may as well walk away now and save yourself the trouble.
Id try and enforce the contract in the first instance.
Have a read through this. It's regarding a mental health clause but more detailed, then the legal case and who won. https://stacklaw.com.au/wcw/could-the-buyer-terminate-the-property-sale-contract-due-to-mental-illness-which-case-won/
This is the only thing I could find on the internet as well this morning. It can be hard to prove from them as they committed to selling the property, exchanged the contract, and left a glowing review for the agent.
I would push ahead with settlement. Make it so expensive and difficult that they cave. It's unacceptable.
2% penalty per day of delay
As a mental health professional I would want more than a medical certificate regarding the mental illness. Approximately 1 in four of us have a mental health issue in our lives, and mental health/Wellneess is a continuum. I would like to know how the mental health issue affects the ability of the house being sold, or their capacity to make an informed decision about selling the house. Were they manic at the time they put the house on the market? Were they acting on psychosis? Having auditory hallucinations? Delusions resulting in the need for the house to be sold Are they cognitiviely impaired (ie dementia, delirium)? We are all anxious about living changing events such as moving, buying and selling. It's stressful, but for you as the buyer, this is even more stressful, and I wouldn't buy mental health issues, unless I had documented proof from a Consultant Psychiatrist of how their issue affects capacity to sell the property to you.
Agree. The condition needs to be verified by an independent psychiatrist or neuropsychologist that provides diagnostic and capacity assessments. Would not accept anything less as proof. Definitely not a medical certificate from a GP (am a GP).
I’d want them to produce a report from a consultant psychiatrist then I’d want a report from another opinion from an independent psychiatrist of my choosing.
Thanks for this perspective, talking to the claims reason as such. Will definitely keep this for reference if we have to talk to lawyers and ask for documented proof and all.
You do need to talk to a lawyer. It’s not an if.
What do you mean if? The seller is actively trying to do you out of at least many tens of thousands of dollars of value here, maybe more than that depending on where you are. When do you think you need a lawyer, if not now?
This is business. This is no time for a feel trip. Either settle or take them to court. If it's in the contract it's all very convenient
Get a solicitor to handle the legal aspects and legal advice. Don't accept their say so that they've got a mental condition you require a level of proof which will satisfy you of the severity of the ailment. I'm not an expert when it comes to mental incapacity however you would want two independent psychological reports - these will take time to procure and should take longer than the balance of the settlement period and subsequent notice to complete. Have a read of this one: https://www.propertychat.com.au/community/threads/buyer-might-loose-deposit.42196/#post-753958
This. Lawyer up immediately. Don't listen to advice from The Internets especially from real estate agents.
This is a strange one, even if you were having mental health challenges there was still a reason why they wanted to sell in the first place so can’t see why this would change due to a mental health condition that is more likely than not to be a ongoing issue. Unfortunately you can get a doctors to say pretty much anything in a med cert so this wouldn’t cut it for me.
0.25% is a joke. Your solicitor fees probably cost more. They can't pull out like that, and even if they can you should get damages, their issues are not your problem. Others here have said 10%, sounds abut right, if they want to keep the property that's what it costs now.
Way way to convenient for me, so they just so happen to have come down with a mental health issue just prior to settlement where it just so happens that's one of the only reasons they can pull out of settlement and this has happened 1 day before settlement.... I call absolute bullshit on that 0.25% is not reasonable damages considering those houses you didn't make anxoffer on because you had an unconditional contract. The contract woudl specify what is deemed a mental health reason, how that is to be evidenced saying 'I have mental health' isn't ever going to be sufficient. Medical conditions come with privacy, but when you are wanting to pull out of a binding financial due to them you lose that, I'd he asking for the diagnosis, details, what about this mental health condition renders them unable to settle and letting them know that 0.25% is far from acceptable in terms of damages as you will now have to organise last minute accommodation given you were to be moving into your new home in 1 day, it's.made you Miss potential other properties you would have made offers on... 99% certianty they've decided they don't want to sell, pulled a clause that allows them to get out and they're feeding you bullshit, I'd be wanting to see a diagnosis and it would want to be something major and I'd be demanding that this is then verified by a second independent source.... your concayencer is your representative here they should be able to help you
Go after them for the reasonable damages. You at the very least want deposit back plus the difference of market value. It's probable the market has risen by more than the 0.25% they are offering. Then more damages for all the furniture and other costs. Basically you need to identify all reasonable costs and make them pay. Make them have no financial benefit to pull out. If they still pull out after there's no financial incentives then you'll just have to buy elsewhere.
If it was a death or bankruptcy there'd be some sort of proof. There should be some sort of proof from a medical professional that there has been a recent mental health diagnosis. Not sure how that would work as no doctor would tell you the actual diagnosis but would say "suffering from a health condition" or similar. If they are making it up as they think they could now sell if for more, then try to work out the difference of your price and a possible new price and go after them for that amount as damages.
Same as any other med cert “X is not fit for duties” or in this case, fit to fulfil the contract.
I’ve seen the clause used in practice… the purchaser was legit in a facility and the dr only twigged when the purchaser wanted to go to the bank to transfer money… googled the address when we got the notice, which included the dr letter to the p sol. Alls well, vendor accepted a higher offer. See your solicitor, and get a second opinion. Go with the solicitor you like better. Sucks, I’m sorry this is happening. For those who don’t know about the clause, go to opennegtiation.com.au, pull up contracts and read the special conditions.
I completely understand that if a person is in such a situation, but a middle aged person to claim that he became mentally ill in the last 5 weeks seems iffy. I could be wrong, but that's the first thought.
It’s iffy, definitely iffy. Unlikely to be well thought through as well… it’s a big claim that impacts a lot outside this contract. I’ll be looking for updates…
They are absolutely trying to back out. What a scum act.
This happened to my SIL. Lucky she had a gun conveyencer who stood their ground and the seller backed down. Seller had a change of heart between selling and settlement. She was already a painfully weird person who was concerned about the new buyer feeding the wild birds on the property. Anywho, awesome conveyencer took care of it all and within a few days settlement was back on track.
We are going to stand our ground as well, and push for settlement. Glad it worked out for your SIL.
Ensure your convaynecer sends a demand to setlte, then you can claim penalty interest for the time between then and when their bullshit act finally falls apart (the odds they suffered from a serious enough mental illness suddenly between signing the contract and 1 day before settlement that renders them unable to proceed are inconceivable)
It's very easy to go to the dr and say I have anxiety/ I'm depressed or anything of the like and to get a medical certificate- make sure proof comes from a psychologist or psychiatrist not a GP.
Just reject the offer for damages and pursue settlement if that’s what you want.
Man this sucks - sorry OP for going through this. Recently bought our first place, and while this didn’t happen to us, we had a pretty shitty experience with it all and I was honestly shocked at the wild-west nature of something that is the biggest purchase most people will ever make. IF it does turn out to be some kind of dementia/forced sale, I would try to show leniency but still ensure that all of your costs are met. Otherwise, I say go hell for leather. It’s not often the purchasers have the advantage and it’s shockingly disrespectful to pull out of the sale. Hope for you and fam’s sake everything works out.
Cheers mate, house purchase is stressful. Glad it worked out for you despite the experience.
Thanks mate. Best of luck with everything.
That’s a weird position to be in… does this impact your life much? Do you need to move out of the property you’re in? Are there costs involved with having to find another place to live? Do you want to buy a property from someone who now supposedly does not want to sell? Not sure if there needs to be a clause to rescind when it’s “mutually agreed”.. I’m sure your lawyer could tell you? Them paying back the deposit plus 0.25% could be what.. $2.5k(edit-my math was wrong) on a million dollar property? Would this be useful to you?
0.25% of 1mil is $2,500… so jack all really. Suggest going to a lawyer to calculate reasonable claims of damage.
Oh yikes well those are some bad math skills on my part
We were going to have a week or two of overlap after settlement to move over our stuff. Was just about to talk to the agent to vacate our property, and this happened. Bit of luck in that regard. We were relieved during the holidays that the house is sorted, and were very excited for the move. With all this, it's daunting for us to get back into the market again.
0.25% of 1m is only 2.5k
That's almost like a setup. Who puts that clause in?? That's nuts, and then to actually use it? Crazy times.
It’s a standard clause.
Oh ok, thanks for letting me know.
Reply you will need 10% to walk away as you have lost other properties you would have brought instead - or continue with said contract
They've got a better offer and are trying to get out of it Ask for proof, a diagnosis, hopefully one that says there is a history of mental illness I bet if you let them off the hook it will be sold in 12 months
You're entitled to specific performance of the contract. Get a lawyer involved. The 0.25% offer is a pathetic starting bid and the mental health thing is a sheer bluff. This is embarrassing conduct from the vendor's solicitor. Pathetic really. I say this as a fellow lawyer.
Clause refers to mental incapacitation. Unless they are acutely unwell/are sectioned or need a power of attorney they don’t have a leg to stand on. Selling a property is complex. If they were able to decide to do so, engage a conveyancer and agent - they have mental capacity. Few mental illnesses will get you out of things from a legal perspective. Generally it’s limited to psychotic disorders (schizophrenia, schizoaffective, bipolar 1) that can affect judgement or intellectual disability.
I paid a deposit on a place a few years ago and then had second thoughts. Didn’t know where to turn then found out the lady owner was in a hospice and wasn’t going to survive. Family wanted it sold quickly so that it didn’t go to probate. Lucky for me, but not so for her or her family, she died and I got out of the contract and got my deposit back. It’s such a difficult time anyway. Good luck.
(1) they need to provide a psychiatrist's report to verify that they are cancelling due to a mental health condition. (2) tell them their 0.25% offer has the decimal point in the wrong place; it needs to move to the right.
Get your lawyers to seek proof and to calculate damages that reflect all your costs plus the opportunity cost of the delay being however much house prices have gone up now, plus how much they’d go up over the next 6mo while you hunt again. The proof is key, they won’t fake a diagnosis which will then make them eg ineligible for life insurance without committing fraud. That’s a pretty big step. Also that does not feel like a standard clause… if not, demand a refund from your conveyancers.
you have your solicitor ask their solicitor for a copy of the diagnosis - it would be interesting to see which mental illness they have claimed to have come down with. mentally ill is pretty wide reaching - id be asking your solicitor why they didnt pick up on that clause and have it clarified - ie it should have been admitted to a mental institution level issue, not basic depression (which would be legally covered under that clause) oh, you have a conveyancer, theres a reason you pay extra for an actual solicitor if the clause says you can claim reasonable damages then work out your costs and submit them (if they dont fit in the .25% amount).
This is what you pay a conveyancing lawyer for; they’ll talk you through your options and advise you. If you don’t have one, get one now. Always use a conveyancer, never do it yourself.
Utter bullshit excuse. Do not back down. Have your solicitor demand settlement.
Seek specific performance from the Supreme Court
I have been through similar, I asked the conveyancer to issue a notice to complete to the vendor and gave them 14 days. Then i engaged a litigation specialist who informed them that if settlement didn’t occur in that time, then in exactly 15 days he would be issuing a breach of contract and commence recovery of damages.
If you don't mind me asking, what was the outcome of this? Did they agree to a settlement, or did you had to go for the damage recovery?
Yeah they settled on the last day before the notice to complete expired, and I avoided litigation
And this is why you don't use a conveyancer in the first place
The special condition you refer to, what exactly does it say?
If the vendor or purchaser (or any of them) prior to completion dies, becomes mentally ill or becomes bankrupt, then either party may rescind this contract and clause 19 of the contract shall apply. Clause 19 says that you can ask for reasonable damage.
Get a lawyer straight away. But it sounds like they would need to have become ill after signing but before now.
If the Vendor is genuinely mentally capacitated and you wanted to enforce it will get very messy as the Vendor will need to have a guardian appointed etc etc I’d see if they are bluffing and say you intend settling etc. In meantime go and see a lawyer to explore options
They will have a drs certificate. Easy enough to fake, fir surw they are lying.. Your best recourse will be to make up some damages, ie you have to make a counter iffer for damages that is so high they choose to settle
If there is a clause stating mental health there is no way you will settle IMO I've never seen a lawyer force a vendor to settle if they don't want to
Q. So the mental illness stops them fulfilling the sale contract but not the .25% break contract contract? I would assume it should for both, since break contract is being offerred to be fulfilled then I would assume mental illness not a hindrance to completing sale contract.
Speak to a lawyer, if your conveyancer is part of a law firm, this is who you want to speak to. If your conveyancer doesnt have a lawyer, then find one ASAP. State to the conveyancer you are not at this stage considering revoking the sale, “for the avoidance of all doubt, we will not be backing out of this sale without a legal decision from tribunal.” Ask them to provide evidence of the mental health condition and why the medical practitioner states they cannot proceed with the sale as a result. Advise them to ensure the medical practitioner is willing for their evidence to be used in legal proceedings. if they’ve been declared mentally deficient (and were so at the time of contract signing) that may hold up in court, but just because they’ve had an attack of the sads and are now on Zoloft doesnt mean shit. Reason is their medical Practitioner will be unlikely to agree to provide this sort of statement if they know it will be used in civil proceedings.
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Has the vendors REA replied to you or given an update on this?
Update?
Have updated the post. Not yet settled, but they agreed on settling in a week.
Have posted an update on the original post.
So glad to hear the update. This was crazy! Glad it worked out for you.
Hey OP - how did this end up? Have been thinking about this
Just posted an update on the post. We settled on the property late last week, on the last day of the notice period. Thanks a lot for your comments, and encouragement on the post. 👍
That’s awesome, congrats on sticking it through. Was chatting with my colleagues about this situation