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Family Loses $320k After A Seller Kept Their House Deposit In A Legal Loophole

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Family Loses $320k After A Seller Kept Their House Deposit In A Legal Loophole

A subject to finance clause was removed in the contract.

In 2019, Sam Gayed and his wife Nardine decided to relocate from Bendigo to Melbourne to educate their children who were under 12. The couple saved their deposit money of over 10years since arriving from Egypt and found their dream home to raise their family, a $320k four-bedroom four-bathroom house in Balwyn.

Sam Gayed and his wife Nardine lost their entire $320,000 life savings in a legal loophole.

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via samgayed1/Facebook

Instantly, they secured the house, paid the $320K deposit, and planned to settle on the property in December 2019. Unfortunately, the deal collapsed. The sellers had removed a section in the contract’s fine print that a standard home sale agreement typically contains, called a subject to finance’ clause. 

In 2019, the couple eyed this four-bedroom, four-bathroom property in Balwyn, Melbourne.

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via Real Estate

This clause allows the contract to be voided and the deposit returned if the buyer’s bank loan isn’t approved. Speaking with News Corp, 42-Year-Old Gayed said it was a bit weird when they removed the subject to finance clause [but] they had got emotionally attached to the house. He added real estate agents told him there was strong interest in the place and that it could be sold to someone else, so he signed.

When it came to signing the contract, Gayed noticed something strange – a subject to finance clause had been removed in the agreement.

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via samgayed1/Facebook

“The agents have great sales techniques; they sell ten houses a month, I buy one house every 10years,” Gayed said. He had applied for the same loan he got to purchase his first house, a doctor’s scheme loan that would cover 90% of the house value without paying the lender’s mortgage insurance. But after he signed, the bank informed him there was a $2million ceiling on this type of loan, completely blindsiding him.

Despite their concerns, the couple signed because they felt pressured as other buyers were waiting.

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via Real Estate

So Mr. Gayed could only secure 85% of the house value, leaving him $160K short plus another $160K on stamp duty. He recalled: “At this moment, we became very stressed and sought every avenue to arrange the additional five percent.” This included selling their Bendigo home and part ownership of his company, but neither could be completed on short notice. 

Now, they’re warning other aspiring property owners to look out for the legal “loophole” that left them penniless.

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via samgayed1/Facebook

He explained he asked the vendor if he could have a little longer to pay the remaining 5%, but they refused. The due date on the contract arrived, and the vendor canceled the deal and sadly kept the $320K deposit. The couple had to max out their credit cards in the following months and overdrew their bank account to stay afloat. 

In addition, the family doesn’t have any savings to their names and lives in a “very tiny house” in Melbourne.

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via samgayed1/Facebook

Now, Mr. Gayed and 37-Year-Old Nardine, with three children, are renting a very tiny home in Melbourne, have no savings, and can’t bring themselves to tell their children about the loss. Likewise, the Balwyn house hasn’t been sold to anyone else as the owner instead kept it and rented it out. The real estate agent who handled the sale insisted the subject to finance clause was removed at the vendor’s direction. 

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