Can vendor move out AFTER completion date?

kozera · 12 March 2012 at 11:20AM

I'm buying a house and found on the 9th March that the completion must be before 24th March so i could avoid paying the stamp duty(am first-time buyer- house is 146,000) .

I signed the contract at the beginning of Feb stating that my preferred completion date is 17th or 23 march ( did not even know about avoiding the stamp duty)- thought it would give myself and the vendor sufficient time to sort out all the issues related( the whole process started in November).

Now I found out from my solicitor that one of the party STILL has not signed the contract and it cannot be guaranteed that the completion will happen before 24th. :mad: as apparently the vendor still has not completed the matters related to their new house.

I highly doubt that they will agree completion for 24th as it is only in 12 days.

I am happy for them to move out after 24March so i could avoid paying the stamp duty. Can it be done ? My solicitor seem NOT to be familiar with such arrangements. I understand there will be some kind of contract/agreement written(?) Who should pay for it and how much can it cost? Obviously if they stay there I will end up paying the mortgage and rent for my current flat. So- can the vendor pay my mortgage for the time they will be there and I am unable to move in ?

would really appreciate any advice on this.

gazareth · 12 March 2012 at 11:34AM

It is likely that one condition of your mortgage is that the house is vacant upon completion of the purchase (often referred to as "vacant possession"). You need to check that point before you even consider anything else, because if that condition is there then it would be mortgage fraud to allow them to stay beyond completion.

sirmosh · 12 March 2012 at 11:45AM

You can't complete on the 24th because it's a Saturday so it would have to be the 23rd. Basically there's no legit way to do this, the mortgage company will want a vacant possession and they're not going to give permission to let the property out the second you've bought it so you'll either have to pay the stamp duty or try and make them move out.

pinkteapot · 12 March 2012 at 11:58AM

How much is stamp duty going to cost you?

What you're proposing is likely to be far, far more hassle than it's worth. Firstly, as others have said, your mortgage company will expect vacant possession and you'd have to notify them that the house is being rented out. They're pretty unlikely to be happy with the situation.

Secondly, you'd become a landlord and the vendor would be your tenant. Even if you don't write up a formal tenancy agreement, they gain all sorts of legal rights just by virtue of the fact they're living there and paying you rent. You could find it very difficult to make them move out.

If you want to do it properly, you'll need to give them a tenancy agreement. The shortest AST you can do is six months, so you couldn't chuck them out until that long has passed.

Unfortunately there's not a lot you can do about the stamp duty.

It's too late for you to pull out and buy somewhere else. Did you make it clear to the rest of the chain from the outset that you needed to buy before the stamp duty deadline? If you have, you could try haggling for a last minute price reduction on the basis that you're now going to have to pay stamp duty, but you risk making yourself very unpopular.

Richard_Webster · 12 March 2012 at 11:59AM

You should have had the chain thoroughly checked when you started and made it clear to your sellers that if completion wasn't by 23rd March you would wont a reduction to cover the cost of the SDLT - that might have motivated them to check the chain above them.

People generally do not bother about checking chains or accept vague assurances form estate agents based on out of date second hand information that there is "no problem up the chain".

There is always a mythical "empty property" that someone is buying at the top....(with an as yet unobtained probate or a warring divorcing couple....).

sonastin · 12 March 2012 at 1:38PM

Stamp duty is £1460. The cost of your proposal (if you can make it work) if things go wrong could run into tens of thousands...
-you become a landlord. do you know what that entails?
-IF your mortgage lender agreed to let you go down this path, they'd probably stick an extra % or two onto your mortgage rate as the risk profile has suddenly got worse (which is why they probably won't let you be this foolish)
-can you afford the cost of the mortgage and the rent if the vendors take advantage and don't pay you anything for the privilege of living there?
-how long could you afford to keep paying for both? If your vendor's purchase falls through, can you afford to wait while they find somewhere else and/or you evict them via the courts (something you can't even start for 6 months if they give you just 1 rent payment)

More realistic options:
1) continue as planned and pay the stamp duty if completion happens after the deadline.
2) give the vendors an ultimatum that completion happens before the deadline or you reduce the amount you are paying by the cost of the stamp duty, or you'll pull out completely.
3) pull out and find somewhere else cheaper which will leave you enough left over to pay the stamp duty on that alternative property.

kozera · 12 March 2012 at 2:01PM

Thank you all for the contribution. I can see now that vendor staying in the house after completion is not an option.

Richard Webster You should have had the chain thoroughly checked when you started and made it clear to your sellers that if completion wasn't by 23rd March you would wont a reduction to cover the cost of the SDLT - that might have motivated them to check the chain above them.

Richard this is indeed a great idea, really regret it did not come to my mind at the wright time. I assumed that from November till March will be more than enough time to sort out everything

sonastin
2) give the vendors an ultimatum that completion happens before the deadline or you reduce the amount you are paying by the cost of the stamp duty, or you'll pull out completely.

Unfortunately, I believe it is too late now to negotiate the price- I have already paid the 10% deposit to the solicitor and signed the contract- correct me if I am wrong.

anselld · 12 March 2012 at 2:07PM

kozera wrote: »

Unfortunately, I believe it is too late now to negotiate the price- I have already paid the 10% deposit to the solicitor and signed the contract- correct me if I am wrong.

Legally, you can renegotiate up to the point contracts are exchanged. Whether it will be accepted by the vendor is another matter!

terryw · 12 March 2012 at 2:08PM

kozera wrote: »

2) give the vendors an ultimatum that completion happens before the deadline or you reduce the amount you are paying by the cost of the stamp duty, or you'll pull out completely.

Unfortunately, I believe it is too late now to negotiate the price- I have already paid the 10% deposit to the solicitor and signed the contract- correct me if I am wrong.

It looks as though contracts have not been exchanged - your signed copy is sitting in your solicitor's office, and the deposit is in a bank account. You are still able to negotiate until contracts are exchanged.

GAH · 12 March 2012 at 2:50PM

The OP themselves admit that they knew nothing about the Stamp Duty holiday. As mentioned above if they had set it as a term of the contract that if they didn't complete beofre the deadline, then they would stand themself in better stead to re-neogiate.

Could of course still do it, but it would become gazundering.

kozera · 12 March 2012 at 6:17PM

Spoke with the solicitor - still no info as to at what stage the vendor is with their purchase or they preferred completion date but was told that he will aim to make the vendor pay the stamp duty. Looking at some posts in here reg. this- it does not look like it will be easy to achieve.

I also mentioned I would like to re-negotiate the price if completion does not take place on 23rd but was advised to speak with the EA...

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Can vendor move out AFTER completion date?

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