Melbourne Real Estate: Victorian Family Loses $ 320,000 Deposit Due to Contract Loophole


A family with three young children under the age of 12 believed they had gotten their $ 3.2 million dream home – until a clause in the contract left them ruined.

A Victorian family who lost their entire $ 320,000 down payment on their home are now warning other aspiring homeowners to beware of the “legal loophole” that has left them penniless.

Sam Gayed, 42, and his wife Nardine, 37, believed they had found the perfect spot for themselves and their three children, all under the age of 12, in 2019.

Based in Bendigo, the family were looking to relocate to Melbourne for their children’s education and found their ‘dream home’ in Balwyn.

They marked the 756-square-meter, four-bedroom, four-bathroom mansion for $ 3.2 million in June 2019 and were due to move to the property in December of that year.

But now, exactly two years later, the Gayeds have no savings in their name, live in a “tiny house” and have had to lie to their children about their sudden change in fortunes.

“It was a tough time, it was like less in our bank account, we used all of our credit cards, we were overdrawn,” he told

It all started when Mr. Gayed noticed something “odd” in the contract.

Mr. and Mrs. Gayed are originally from Egypt and moved to Australia 10 years ago as citizens.

“That’s when we started saving money and trying to buy our dream. We were both saving, we were planning to buy a house, ”he recalls.

They eventually grabbed a house in Bendigo in the Victoria area.

After Mr. Gayed certified his healthcare business and his wife completed her medicals to become a qualified psychiatrist, they were able to refinance their home.

They used their savings and the equity in that home to raise the down payment of $ 320,000 for the new purchase.

But upon signing the contract, the couple noticed that the “subject to funding” clause had been removed.

It is an important clause in a standard housing contract that gives the buyer the legal right to opt out if their bank does not approve the loan.

“It was a little weird when they removed the subject to funding clause,” Gayed recalled.

“We wanted the house of course, we had become emotionally attached to the house, we loved it.”

Mr Gayed also felt compelled to sign the contract with the revised terms because the real estate agent told him there were other potential buyers waiting behind the scenes.

“I was afraid they would sell the house [to someone else],” he said.

“The agents have good sales techniques, they sell 10 houses a month, I buy a house every 10 years.

The couple therefore signed the contract.

“Everything was in order, if they insisted on removing the clause we thought we could get out of it, we had no plans to withdraw,” Gayed continued.

“It would be far from our thought that there could be an escape [in the Australian legal system]. “

Mr Gayed had put his household income into a loan calculator and assumed he would be eligible for the same type of loan he used to buy his first home, a 90% loan for doctors, which allows health professionals to borrow up to 90 percent. percent of a home’s value without paying Mortgage Loan Insurance (LMI).

But after signing the contract, he got bad news – the bank had a threshold of $ 2 million for its doctor program, which he had never heard of before.

Instead of being able to receive 90 percent of the bank’s mortgage, the Gayeds could only get 85 percent.

“Right now we have become very stressed and have been looking for all ways to organize the extra five percent,” he said.

Mr. Gayed frantically tried to raise money for the last five percent of the property, which amounted to $ 160,000, as well as an additional $ 160,000 due in stamp duty for settlement day.

He tried to sell part of his stake in the business he owned, then tried to sell Bendigo’s family home. However, the two sales could not be completed on time.

“I asked the real estate agent to discuss with the seller if we could pay the 90 percent and refund the five percent, they refused,” he added.

But the seller refused, the agreement lapsed, and the seller then took Mr. Gayed’s deposit of $ 320,000, as was entitled by law.

“We had big aspirations and big dreams,” Mr. Gayed said. “Now we are going in a different direction where we are trying to save our livelihoods.

“We lost all of our savings before the closures and the pandemic, during this pandemic, of course, the business has slowed down considerably.

“We haven’t saved anything yet, during these blockades, we haven’t been able to save anything.

“If you want to punish me for wasting the seller’s time, at least making it proportionate, don’t take all my savings,” he stressed.

To date, the sellers have not resold after Mr. Gayed’s deal failed.

Annabelle Feng, RT Edgar’s real estate agent who completed the sale, told that she received a commission for the aborted sale.

She said it was the seller’s idea to remove the “subject to funding” clause.

“We can’t suggest, we just tell them [the purchaser] what are the options, ”she told

“Normally, we inform each buyer of their rights and obligations. They are free to make their decisions.

She also said the seller decided to rent the house instead, which is why she never resold it. has reached out to the provider through its lawyers for comment, but has received no response.

The Gayed family are currently renting a small house in Melbourne. They have no idea if they will ever manage to own a home in Melbourne after the setback.

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