Downsizing for Retirement - buying a unit not yet built.
Sandra was an avid gardener but was finding that maintaining her large section was becoming too difficult. She was delighted to find units in a new development nearby were selling at prices within her means. The plans for the development showed the units looked onto manicured gardens, maintained by a gardener, and intended for the residents of the complex to enjoy. Sandra thought one unit being sold particularly suited her. She envisaged that downsizing from her family home and buying a smaller unit would provide equity for her retirement.
The agent advised Sandra that the units were selling like hotcakes and to get in quickly to avoid disappointment. Contrary to her better judgement, Sandra signed an Agreement to purchase a unit in the development without obtaining legal advice. The sale and purchase Agreement was not conditional on the sale of her existing home. The agent indicated it was likely the unit would be completed and available to move into at the end of that year. Sandra decided to place her home on the market quickly as she needed the sale proceeds to settle the unit at the end of the year.
The weeks passed and Sandra became concerned that her home would not sell before the unit was ready to move into and she would not have the funds available to settle her unit in time, being in default. The bank would not agree to give Sandra bridging finance because she was retired and did not have sufficient income. Once an easy going person, Sandra was becoming irritable and not herself as the stress levels took a toll on her health. Sandra was forced to sell at a reduced price to make sure she was able to pay for her unit on the anticipated settlement date. The settlement date for the sale of her home was scheduled for one month before the unit was due for completion.
Sandra then discovered that the unit was not likely to be ready to move into until midway through the following year. She was most upset to find this out, given she had already sold her home at a reduced price and was due to move out in the next few weeks. As a result, Sandra needed to rent another property to live in for the next six months at a huge financial burden to her. Her retirement savings were further diminished by the cost of rent. Sandra wished she had received legal advice before submitting her offer to purchase the unit as she was unaware of the risks associated of purchasing without having first sold her home. She would also have liked to have the opportunity to cancel if the unit was not ready for her to move into by the end of that year. Sandra is now counting her pennies to make sure she will have enough money to live comfortably during her twilight years.