Interest on Property Deposits

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15 years 3 months ago #9101 by Ronney
Back in 2005 I negotiated for, and subsequently signed a sale and purchase agreement, a 10 acre block on the Hokianga Harbour. It was subject to title but I still had to pay the 10% deposit which I did in December 2005. The title should have been fairly straight forward but the vendor has been dragging his feet mainly, I think, because he hadn't done his homework and the subdivision costs were more than he had expected. Now that doesn't worry me as I'm not wanting to move on to the property but what does worry me is that $15,000.00 is sitting in a Trust Account, and has been for over a year, gathering interest.

Now, as far as I'm concerned, I still don't own the property and that money is still mine until such time as the sale finally goes through. Therefore, any interest accrued should be mine and be deducted from the final sale price. Have I got that right or does the vendor get to make money at my expense by procrastinating.

I mean to ask my lawyer about this but keep forgetting.

Cheers,
Ronnie

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15 years 3 months ago #146272 by moggy
Replied by moggy on topic Interest on Property Deposits
Was the purchase/sale agreement subject to a time limit?

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15 years 3 months ago #146300 by Kiwismum
Ronney, if it is through and agent they have to have noninterest bearing trust accounts so that this issue does not come up at all. I am not sure but I would imagine that a developer would have to have the same thing.

So I theory there will be no interest anyway.

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15 years 3 months ago #146303 by Foxwell
The sale and purchase agreement that you signed should cover this issue. My speculation would be that if the sale does not go through you would get your deposit and interest back - but if it does go through the interest will stay with the vendor.

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15 years 3 months ago #146330 by hilldweller
Have checked my S&P agreement as I had a deposit down for about a year. No mention of interest, so maybe it was as Kiwismum has said. Definitely wasn't any interest applied against the balance owing when the title finally came through.

hilldweller

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15 years 3 months ago #146387 by phill-k
You could look at it as a $15000 investment and the return will be the increased value of the land from the date you signed to to-day. Northland lsb land has shown an average increase in value of over 8% so that makes a pretty good return - if your land cost $100000 then to-day its probably worth $108000, and you haven't had any costs.
A lesson I learnt a few years ago was where any contract is not short in term any deposits required I always stipulate they sit in my solicitors trust a/c, if the other party doesn't like that I move on. Be aware that a trust a/c to-day does not have the protection it did years ago.

Phill & Sheryl
northland

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15 years 3 months ago #146694 by Ronney
Thanks. It hadn't occured to me that the money might be sitting in a non-interest bearing account simply because I believe that all money should be working :p However, that would seem to be a smart way of dealing with deposit money.

Cheers,
Ronnie

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