High Court orders company in liquidation to give purchasers partially completed homes...

The High Court has recently decided that six purchasers of “tiny homes” have a good claim over the unfinished homes, and ordered a liquidated company to transfer the homes to them.

The purchasers each entered into contracts with the company for the sale and purchase of the prefabricated “tiny homes” which were being built in a factory for later delivery to the owners’ land. However, before the homes could be completed, the company went into liquidation.

Three of the purchasers had only part-paid for the homes. Their homes were 40% to 50% complete at the time the company went into liquidation. The other three purchasers had paid the full purchase price and were only waiting for a Code Compliance Certificate (CCC) to be issued for their homes.

The company told the purchasers that their homes could be sold by the liquidators. The purchasers brought proceedings to the High Court under the Companies Act in order to prevent the sale of the tiny homes during the liquidation process. 

The purchasers who had paid the full purchase price argued that ownership of the homes had passed to them and therefore the homes were not assets of the company in liquidation. The Court rejected this argument because the sale and purchase contracts required further conditions for ownership to be transferred. For example, the homes also needed to be in a deliverable state.

All six of the purchasers also argued that they had an equitable lien over the homes. An equitable lien gives a purchaser the right to enforce an owner’s obligation to transfer the goods as soon as the full purchase price is paid.

The Court decided that the tiny homes were readily identifiable to the separate contracts with the purchasers, meaning that each purchaser had a specific home they were entitled to. The liquidated company could not have sold the tiny homes to anyone, but to the purchasers of their identified contract.

The Court decided these factors meant that there was clear subject matter that the lien could attach to, and so each purchaser had an equitable lien in their tiny home. The company was ordered to transfer the homes to each of the six purchasers, whether or not they were complete.

It is important to be aware of your rights when entering in to a contract so you can get what you have paid for, even if the company liquidators refuse to hand over what you have paid for. If you are confused about your rights, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Alan Knowsley and Hunter Flanagan-Connors