|
Bond applicant held to his contract Thursday, February 19, 2009 During March 2008, James* signed an Agreement of Sale in respect of a property in Douglasdale. The purchase price of the property was R1 million. He undertook to finance the property by way of a deposit of R150 000 and to apply for a bond for the balance of R850 000. These details were recorded in the Agreement of Sale. The R150 000 that James intended to use as a deposit, was an amount that his sister, Mary*, had undertaken to lend to him. The sum of R150 000 was to be paid to the Estate Agent to be held pending registration of the transfer of the property into James' name. However, James did not make payment of the deposit of R150 000, a conditional clause in the Agreement of Sale. As it happens, Mary was a robbery victim at her home. As a result of the robbery she changed her long-term plans and decided to emigrate to Australia to join her daughter. She informed James, that under the circumstances she would no longer be in a position to lend him the sum of R150 000 and James informed the Estate Agent that the loan was no longer forthcoming. He advised the Estate Agent that he was no longer in a position to proceed with the deal. He was advised by the Estate Agent that as he had not made the Agreement of Sale conditional upon the securing of the loan of R150 000 , he therefore did not have a "back out clause". The Estate Agent advised James that he was bound to proceed with the Agreement of Sale and that if he did not proceed with the Agreement, he would be liable to legal action from the Seller as well as for the payment of an Estate Agent's commission. He was further advised that the only way to avoid this potential legal action was to apply for a full bond, in other words, a bond for R1 million. Feeling that he had no other option but to do so, James completed and signed a fresh Agreement of Sale and applied for a full bond of R1 million. James was not too perturbed by this Agreement of Sale as he felt that his financial circumstances were such that he would not qualify for a bond of R1 million, his hope being that the bond would be declined thus affording him the justification for cancelling the deal. Later, to his surprise and dismay, he was informed that his bond application for R1 million had in fact been approved. James then approached the Office of the Ombudsman claiming that it was impossible for him to have qualified for a bond of R1 million based on his income and expenditure and that the bond of R1 million probably constituted reckless lending on the part of the institution. The Ombudsman duly took up the matter with the bank and was informed that James' application had met the bank's scoring criteria, that the income and expenditure provided by James displayed affordability, and that the bank furthermore based their decision on the manner in which James conducted his account and the information furnished by the credit bureau. Also, all James' credit cards were paid up. It was on this basis that the bond was granted. The bank accordingly refused to allow James to resile from the contract. *Real surname & name withheld Consumer Tips In any Agreement of Sale there are more often than not a number of variables. The agreement of sale should be made conditional upon the fulfillment of these variables. For example:
|