How Coutts Helped Clients Avoid Further Losses on a Failed Land Purchase

Kay’s client exchanged on a purchase of unregistered vacant land in 2024 with the intention of building a house on the land for a disabled relative so they could be closer to family who would ultimately end up being caregivers. The client and other family members pooled the 5% deposit required to secure the land and also paid significant stamp duty 3 months after the exchange. The land rwas egistered a year later with 21 day settlement.

Due to a change in the clients employment circumstances a few months prior to registration, the client could no longer obtain the required finance to settle the land although they had consulted many brokers and they and their family did all they could to try and obtain the necessary finance to settle the land purchase, unfortunately it was just not possible by the deadline.

The vendor issued a Notice to Complete, which had expired, and the vendor could now terminate the Contract. The Contract contained a clause whereby a 5% deposit was payable on exchange; however, should the purchaser not complete and settle on the land, they would be required to pay the additional 5% deposit on termination of the Contract by the vendor. They would also be exposed to a lawsuit should the property not sell for at least the amount of the purchase price under the Contract.

Kay made a request to the vendors to enter into a Deed of Mutual Rescission and to accept a forfeiture of only the 5% already paid by the clients on exchange, and not to require the additional balance 5% deposit to be paid as per the terms of the Contract. Kay advised of the circumstances surrounding the purchase, that it was to assist a relative who would require future care to be near family so as to easily provide that care in a private family home.

Fortunately, the vendor agreed to the request for a mutual rescission, saving the clients the further 5% deposit and the potential of a future lawsuit. This also allowed Kay to obtain a refund of the significant stamp duty already paid for her clients.

Although not the desired outcome envisioned by all, the clients were extremely grateful to Kay for minimizing further costs and future liability and being able to obtain a refund of the stamp duty.