While the current Contract for sale of Land clearly sets out the rights of a Vendor when a Purchaser defaults (unable to settle), we now have a case which supports it {Kelly v Galafassi & Anor [2013] NSWSC680}
This Article is a follow on from “Purchaser sued for deficiency in resale price – a real case to follow!”
To recap: Toni Collette and her husband David Galafassi (the Purchasers) entered into a Contract to buy a property in Paddington for $6,350,000 (before selling their own property in Bronte). The Bronte property did not sell in time and the Purchasers were unable to complete the purchase of the Paddington property due to insufficient finances. The Contract was terminated by the Vendor and the Purchaser forfeited their deposit paid.
The Vendor then resold the Paddington property for $5,500,000 and sought to recover the deficiency in resale price from the original Purchasers (Toni Collette & David Galafassi). Legal proceedings were commenced claiming a loss of $317,500 plus costs and expenses incurred on the aborted sale plus legal costs and land tax.
Standard clause 9 of the Contract for sale of land states that where the Purchaser defaults under the Contract the Vendor can sue the Purchaser for deficiency in resale price, reasonable costs and expenses or sue to recover damages for breach of contract.
The higher the purchase price, the more the property prices will fall in a failing property market.
Justice Windeyer believed that the Vendor took all reasonable steps to minimise her loss and ordered that the Purchaser (Toni Collette & David Galafassi) pay more than $800,000 in damages for failing to buy the Paddington property.
