Off-the-plan $59,500 deposit refund refused due to $1,000 discrepancy

Jennifer DukeDecember 7, 2020

A recent ruling calls attention to the fact that you must be accurate with your property dealings and ensure you stick to the specifics of your contract, even if the dollar value difference is minimal.

In the Supreme Court of Victoria, plaintiffs Gregory Maurice Putt and Lee Stacey Walker were refused a $59,500 deposit refund on a conditonal loan, due to asking for a loan of $1,000 more than specified in the contract and not then taking further steps after their finance was refused.

In the case of Putt & Anor v Perfect Builders Pty Ltd, the plaintiffs sought a refund on their deposit for Apartment 203, 449 Hawthorn Road, Caulfield South after signing the contract of sale dated 27 May 2013. 

The plaintiffs say that, on its proper construction, general condition 14 of the contract entitles them to have the deposit returned.

In the contract, the following was stated:

The following details apply if this contract is subject to a loan being approved.

Lender: AFG Home Loans

Loan amount: $475,000 Approval date: 4th June 2013

However, when Walker and Putt went to apply for the AFG loan, a 'Requested Loan Amount' of $476,000 was stated.

The court transcript details:

The application form exhibited to her affidavit states the purpose of the loan as ‘O/Occ’ and the ‘Purpose Amount’ as $631,000, made up of a ‘Requested Loan Amount’ of $476,000 and $155,000 of the plaintiffs’ ‘Own Funds’. The application notes that the plaintiffs seek approval for ‘an 80% LVR facility of $476,000 to enable them to purchase an owner occupied property to the value of $595,000’.

The plaintiff's solicitors informed the defendant's solicitors that the finance application had been denied before 4pm on 14 June 2013 and requested a cheque for the refund.

While the plaintiffs argued that due to a small amount of difference, $1,000, they should be entitled to a refund, the application was refused.

"First of all, there is insufficient evidence to persuade me that the plaintiffs applied for a loan of the amount of $475,000 specified in the contract," the judge noted. If the plaintiff had applied for $475,000 the issue would not have occurred.

"Even if that is not correct and the plaintiffs should, logically, be regarded as having applied for a loan of $475,000 by asking for the higher amount, I am not satisfied by the evidence that they would have fulfilled their obligation under general condition 14.2(b) to do everything reasonably required to obtain approval of such a loan."

For a full copy of the court discussion and decisions, see Austlii.

If you are looking to buy off-the-plan, consider these three top tips.

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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