I was asked to give some advice to a couple who have contracted to buy a house, but settlement is being delayed.
The couple have been offered early possession but that comes with risks:
- the property becomes the buyer’s risk from the date of possession, so the buyer needs to insure the premises, but might be able to agree with the seller for reimbursement for that cost between possession and settlement, or the sale falling through;
- the buyer is liable for the outgoings, but can agree to be reimbursed by the seller; and
- most importantly and somewhat surprisingly, if the sale does fall through, the transfer duty is arguably not refundable, because it turns the contract into a terms contract, and cancellation of a terms contract does not result in the transfer duty being refunded, however, the buyer might be able to sue for damages if the seller is at fault, or might be able to agree that the seller should indemnify the buyer if the sale falls through;
- if the sale falls through when the rental market is tight, moving out of your own property might not be a good idea.