Exchange and completion on house

mel19632 · 11 February 2008 at 3:40PM

I have a question on exchange and completion of a house....

Basically we are exchanging today with a 5% deposit - however we are supposed to be completing on friday (10% deposit being put down).

The people we are buying off are very difficult and have said that if we don't complete by friday, then they will pull out of the sale.

If we exchange today - can they do that? At the moment, the mortgage funds have not been called down by the solicitors and we may not be able to complete on friday.

Hope someone can help!!

slipp_digby · 11 February 2008 at 4:03PM

Your conveyancer sounds terrible

Why are you about to exchange contracts with a completion date of friday which you dont think you can realistically meet? Have they (conveyancer) advised when they actually can draw down the funds from the lender?

Are they really going to let you sign a contract you can't fulfill?

If you and the vendor both sign and exchange contracts today then it is binding in law and neither you or them can 'pull out' without consequences.

Most importantly there will be legal/financial consequences if you fail to complete on time, especially with a difficult vendor. They may look to recover losses, as may others in the chain.

merlinthehappypig · 11 February 2008 at 5:15PM

As slipp-digby says this is not a position that any decent conveyancer would allow you to get in to.

I don't understand the bit about the 5% deposit on exchange and then a further 10% on completion so I wonder if you haven't been told the whole picture?

Normally you would pay a 10% deposit on exchange, then the full balance on completion. This can be lower, say 5%, if the seller agrees.

When you are ready to exchange your solicitor or conveyancer will agree a mutually agreeable completion date with the seller's solicitor. When this has been agreed, both parties have to abide by it. There can be significant financial consequences if you don't.

It is possible to exchange and complete on the same day so, logistically, what you are suggesting is possible. Your conveyancer would normally need to know this in advance so that everything can be done on time, including the drawdown of the funds from the bank.

If it hasn't been arranged in advance then your conveyancer is unlikely to be able to meet this deadline.

The bottom line is that you don't agree to any date that your conveyancer can't meet. You take your advice from him or her. If they say they can meet the deadline, then fine. If they can't then you need to agree a later date.

Richard_Webster · 11 February 2008 at 5:21PM

Best thing to do is talk to your conveyancer and he can then explain the poitns because to me they look like a classic case of confusion because something has been misunderstood or not explained properly. So go back and say you don't understand and will they go through it again with you.

Most likely your conveyancer is trying to get an exchange with a slightly later completion date so that there is time to draw down the money. If you have exchanged with a later completion date then the seller can't pull out.

space_rider · 11 February 2008 at 7:16PM

I had that done to me after I had spent all that time in the solicitors going through the documents only for them to get a phone call to say that my buyer only had 5%. What I didn`t understand was why go to exchange when you know you need 10%. I was so upset that I put the house back on the market. She did come up with the money a week later.

chappers · 11 February 2008 at 8:40PM

This has been brought up a few times recently.Whatever you do don't exchange and set a date for completion that you can't meet, the consequences of not completing can be serious. I have said this many times before but here goes again.
If you fail to complete on the day set then the vendors solicitor can serve on you a Notice to Complete, this then gives you 10 days to complete, if after that 10 days you still fail to complete then they can pull out of the legally binding contract,keep your deposit and sue you for any costs due to the aborted sale please also note that other people up and down the chain may be in the same position and you could also possibly be sued for someonelses lost deposit and costs

mel19632 · 12 February 2008 at 1:14PM

Thanks for all the replies - I think I have been confused by my boyfriend, as now he is saying that he never said we were going to exchange on 5%!

its not the conveyancers, its def. my boyfriend. Date set for exchange and completion for Friday!

Richard_Webster · 12 February 2008 at 3:07PM

I had that done to me after I had spent all that time in the solicitors going through the documents only for them to get a phone call to say that my buyer only had 5%. What I didn`t understand was why go to exchange when you know you need 10%. I was so upset that I put the house back on the market. She did come up with the money a week later.

Your solicitors were a bit daft leading you to expect 10%. Sure solcitors ask for 10%, but most of the time know they are not going to get it and very few sellers' solcitors would turn down a 5% deposit if that's all the buyer could provide. I can't imagine why your solicitor lead you to suppose that it was such a big deal to insist on 10%. He should have warned you that it was quite possible that you would only get 5% or less and that you should accept that. In the real world the deposit is only of practical significance if the buyer doesn't complete - then you have more of their money.

The chances of a buyer deciding not proceed for some random unrelated reason (e.g family illness/death) in the period while they are trying to find the difference between the 5% and 10% are higher in my view than a person who has put down a 5% deposit breaking his contract and leaving the seller with only that deposit. So why push for 10%?

slipp_digby · 12 February 2008 at 8:45PM

slipp_digby wrote: »

Your conveyancer sounds terrible

I take it all back.

Your BOYFRIEND sounds terrible give him a hard slap

jatt · 12 February 2008 at 9:18PM

Hi everybody,

I am a bit confused here, I am a FTB with 100% mortgage and no deposit, so what happens at exchange regarding this 5% or 10% deposit you guys r talking about?

Thanks

TBeckett100 · 12 February 2008 at 9:33PM

i think exchange and completion on the same day applies to 100% mortgages

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Exchange and completion on house

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