A member asked over 8 years ago

Vendor finance contract of sale advice

My partner and I entered into a vendor finance arrangement to purchase a house 3 years ago, however we are unable to obtain a loan to finance the loan under our own name. The owner now would like to sell the property, I'm just wondering if we are entitled to get our deposit back and what are our other rights. Can I send through a copy of the contract for your perusal and advice us what we are entitled to.

Law Advisor Research Team
Researchers at LawAdvisor

Hi there. Vendor finance refers to an arrangement where a seller of property financially assists the buyer to purchase the property. There are different types of vendor finance, such as “rent to own” schemes and deposit financing.

From the information you provided, it appears that you entered into a vendor finance arrangement 3 years ago under which you agreed to pay the deposit on a house and make payments for the first few years to the vendor. You are now required under the agreement to refinance with a “mainstream” mortgage in your own name. You have not been able to obtain this finance and the owner/vendor wants to sell the property.

Your legal rights will largely depend on the terms of the sale and financing documents you signed 3 years ago. A lawyer would need to review these terms to properly advise you on what options you have. It is unlikely that you would be able to get back your deposit or any other money paid to the owner/vendor because financing arrangements such as this usually require borrowers to carry the risk of not being able to obtain new finance.

Depending on the circumstances in which you entered the financing arrangement, you may have a legal claim against the vendor if their conduct involved misrepresentations about your legal obligations under the arrangement or if you were pressured into signing the documents.

Suggested way forward

Your situation sounds challenging and it is important that you understand your legal rights and obligations. A lawyer can review the contracts you signed and advise you fully on your legal options. By pressing the “Take Action” button – which will become available soon – LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.

Answered over 8 years ago   Legal disclaimer


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