'I paid deposit in the boom - and my apartment is still not built'
THE WORLD as we know it can change while you're waiting for a builder to finish an apartment block. A reader emailed me about the south Dublin apartment she bought which is taking so long to complete (22 months and counting), that although she put her deposit down during the heady days of the boom, she will be completing the sale in a slump, financial credit crunch and in negative equity.
She signed a building contract for a €375,000 apartment in September 2006 and paid the builder €15,000 on top of a €5,000 deposit. The estimated date of completion was November 2007.
She admits she signed the building contract without reading it, saying that after experiencing over a decade of rising property prices, she naively didn't foresee any problems . "My solicitor never brought to my attention that there was no date for completion, just the words "in a practical time". She has since changed solicitors but the new one has told her there is little that can be done to legally allow her walk away from the contract. She has been told if she does she will not only lose the €20,000 paid to her builder but risk being sued.
The apartment is now only valued by the bank at €330,000. She hasn't yet got a notice of completion from the builder and fears the value may fall further by the time she does.
"I appreciate that this time is not just bad for new (and perhaps old) homeowners but for some builders too. But if my builder had kept to his original completion dates, I would not find myself in the middle of a credit crunch with terms and conditions changing almost weekly," she says.
Her current solicitor told her that had he dealt with the building contract, he would have made sure that a deadline for completion of around 18 months was inserted. However, a northside solicitor I spoke to says arguing with a builder over completion times hasn't always been straightforward. "When the market was buoyant, the builder was calling the shots and often left long deadlines of sometimes up to three years . There wasn't a lot of power on the consumer's side. The problem was that if a buyer argued through their solicitor with the terms of the contract, there was always another buyer waiting in the wings and they might find their deposit being returned to them."
He says given the vagueness of the clause in her building contract regarding completion "in a practical time" it might be possible to take proceedings under the EU Directive on unfair terms and conditions in consumer contracts but it would be "a gamble".
Solicitor Edward McGarr says in cases like this a solicitor might be prudent to write a series of letters warning the builder that the delay in completion is inordinate, "culminating in a letter stressing that time is of the essence of the contract and imposing a date for completion. It could say that failure to complete on a valid closing date, where time is of the essence, will terminate the contract".
Both solicitors felt, however, that landing in negative equity is the risk you take when buying property. "The economic tide has turned and she and others are just unfortunate to be caught up in it," said the northside solicitor.
Not everyone is accepting this fate, however . There is anecdotal evidence that buyers are negotiating substantial discounts with builders when it comes to closing a sale. An estate agent tells me that as long as the discount the buyer is looking for is "within reason" builders are often willing to come to some agreement. He said it helps if the buyer can provide proof of their current loan offer. If a builder digs his heels in and refuses to budge on price, however, it might be a gamble to walk away. Few builders have pursued people through the courts for pulling out of a sale but in a falling market, that could change.
