Act quickly if you want to reclaim your deposit over building delays

A five figure deposit on an overseas property is a sizeable chunk of money to lose and few people have the time or the inclination to scrutinize loopholes in purchase contracts to try to reclaim money, according to Daren Wallbank of international property specialists reclaimyourdeposit.com.
 
‘We’re well aware, through experience, of the games that developers play and know which complaints are grounds for recovering seemingly lost deposits. Whilst adverse exchange rates or failure to secure finance may be topical drivers for buyers to pull out of deals, these will not wash in court to get your deposit back. You have to play a more tactical game,’ he explained.
 
Delays are generally the strongest grounds for reclaiming your deposit but you must act at breach of contract, not at completion, or it’s too late, he said. ‘Unfortunately, as a rule, the court is not on your side. They want your ongoing taxes and fees to fuel the local economy.  And, with court cases taking up to two years, the unit could be finished by time of the hearing resulting in the case being thrown out of court,’ he added.
 
The company, which does not charge a fee for its services but instead takes a percentage of money reclaimed as a success fee, says legal action is not always the best route to follow.
 
Legal action against a developer is the most lengthy and costly course of action, it points out.  Once a case has started the developer will avoid further negotiations and rarely accept liability. In the knowledge it could take up to two years, the developer has effectively bought himself time to complete the unit before the hearing and thus get the case thrown out. Courts do not want to cancel contracts as tax revenue is lost.
 
Negotiating with the developer can provide more immediate results but very rarely will a refund be offered without a court order. The most likely outcomes of this kind of claim are discounts, payment of interest for the delay or switching a deposit across to a completed unit.
 
Selling the contract to someone else is another option and there are a growing number of individuals or investor groups who will buy private contracts at a discount.  ‘They will either be looking to complete on your unit if the development seems viable or take on the court case in the belief they can recover the full deposit,’ explained Wallbank.
 
Many developers offer the opportunity to switch to a completed unit on the same development but this can be a poisoned chalice if you’re intention is to get your deposit back, Wallbank says. The developer will see it as a solution to the claim of ‘breach of contract for delays’ and any court would undoubtedly side with the developer.  ‘Should you turn down the comparable completed unit you need to be very clear that the replacement is unsuitable or inferior to the one originally purchased,’ he explained.
 
Switching to a completed unit on a different development is another option. Some solvent, stable developers are willing to take over the reclaim fight in return for switching you into one of their completed properties. They will discount this unit by up to 100% of your current deposit.  The new developer will then take up your deposit reclaim case and, if they win, keep the money or a substantial percentage.  If they lose, you still have a completed property.