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  • FIRST POST
    mel19632
    Exchange and completion on house
    • #1
    • 11th Feb 08, 2:40 PM
    Exchange and completion on house 11th Feb 08 at 2:40 PM
    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!!
    Paying down the mortgage:
    At 1 October 2011: 226,000
    Currently: 224,499
    Aim: 85% LTV (212,500)
    Paid 1,500
    Target remaining: 88.89%
Page 1
  • slipp_digby
    • #2
    • 11th Feb 08, 3:03 PM
    • #2
    • 11th Feb 08, 3:03 PM
    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.
    Last edited by slipp_digby; 11-02-2008 at 3:21 PM.
  • merlinthehappypig
    • #3
    • 11th Feb 08, 4:15 PM
    • #3
    • 11th Feb 08, 4:15 PM
    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
    • #4
    • 11th Feb 08, 4:21 PM
    • #4
    • 11th Feb 08, 4:21 PM
    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.
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
  • space rider
    • #5
    • 11th Feb 08, 6:16 PM
    • #5
    • 11th Feb 08, 6:16 PM
    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
    • #6
    • 11th Feb 08, 7:40 PM
    • #6
    • 11th Feb 08, 7:40 PM
    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
    • #7
    • 12th Feb 08, 12:14 PM
    • #7
    • 12th Feb 08, 12:14 PM
    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!
    Paying down the mortgage:
    At 1 October 2011: 226,000
    Currently: 224,499
    Aim: 85% LTV (212,500)
    Paid 1,500
    Target remaining: 88.89%
  • Richard Webster
    • #8
    • 12th Feb 08, 2:07 PM
    • #8
    • 12th Feb 08, 2:07 PM
    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%?
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
  • slipp_digby
    • #9
    • 12th Feb 08, 7:45 PM
    • #9
    • 12th Feb 08, 7:45 PM
    Your conveyancer sounds terrible
    Originally posted by slipp_digby
    I take it all back.

    Your BOYFRIEND sounds terrible give him a hard slap
  • jatt
    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
    • By TBeckett100 12th Feb 08, 8:33 PM
    • 4,314 Posts
    • 3,553 Thanks
    TBeckett100
    i think exchange and completion on the same day applies to 100% mortgages
  • jatt
    Hi TBeckett100,

    Is there any other option for people with 100% mortgage or do all of them exchange and complete on same day?

    Thanks vbmenu_register("postmenu_8605525", true);
  • PasturesNew
    This shouldn't be a problem these days, with lenders not liking lending 100% any more it won't affect many people at all. People will have to come up with the deposit, like the good old days.
  • Richard Webster
    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?
    Unless you are getting one of these 105% loans such as those offered by Northern Rock, if it is literally 100%, then usually you will have to find some money for SDLT, Land Registry Fees and the solicitor's costs on top. You give that to your solicitor before exchange and he uses it as the deposit. On a £150K property this would be a bit over £2,000 so your solicitor will try to persuade the people up the chain to accept that on exchange... It is not ideal but often the bottom line is whether someone who has put £2,000 in, would walk away, and not complete, thereby throwing that money away?

    The sum paid over comes off the amount the seller's solcitors will need to be paid to them on completion but as 100% mortgage money will appear the costs SDLT etc get paid out of the surplus.

    If not you either pay for a deposit guarantee policy (which is quite expensive for what it is) or exchange and complete on the same day. Usually the FTB with the 100% mortgage has nothing to lose by exchanging with a nil deposit a week or two before completion, but the sellers, if they are buying something else will be more windy about this because they stand to lose out more if something goes wrong.
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
  • themdns
    Hi guys,

    I am having a really stressful problem.

    Basically seller wants to E&C on the 29th January. However, I am still awaiting mortgage offer. valuation was done on house on wednesday.

    seller made it clear if E&C not complete they will pull out.

    I will then lost my deposit.

    Is there anything I could do to basically stop seller from pulling out?

    Will I lost my deposit? Will I have to pay for the solicitors still and the mortgage broker?

    It is stressing as I am also without a place to stay then as my current contract on the house I am renting is finished on the 31st January.

    I will be grateful for any advices or past experiences.

    Please HELP!
  • Milliewilly
    Hi guys,

    I am having a really stressful problem.

    Basically seller wants to E&C on the 29th January. However, I am still awaiting mortgage offer. valuation was done on house on wednesday.

    seller made it clear if E&C not complete they will pull out.

    I will then lost my deposit.

    Is there anything I could do to basically stop seller from pulling out?

    Will I lost my deposit? Will I have to pay for the solicitors still and the mortgage broker?

    It is stressing as I am also without a place to stay then as my current contract on the house I am renting is finished on the 31st January.

    I will be grateful for any advices or past experiences.

    Please HELP!
    Originally posted by themdns

    It is possible to do in the timescale you give. If you haven't paid a deposit then don't until you have your mortgage offer and are happy you can complete by a given date. Have you had the Survey report back yet as this may mean renegotiation with the seller?

    If the seller pulls out they are not going to find anyone else to buy by the 29th January. If the seller does pull out then you will lose any money you have spent on a survey plus your solicitor will probably charge you for the work they have done upto date unless you negotiated otherwise.

    How long has the process been going on for for the Seller to ask for a completion in a couple of weeks?
  • themdns
    i have forgotten to mention that it is a brand new place, i am buying off developer.

    offer was accepted on the 14th December. valuation was only done on wednesday 13th January.

    i am afraid that developer is keen to pull out as the asking price for a similar unit on the floor above is now fixed by +25k from my offer.

    this is depressing!
  • Milliewilly
    i have forgotten to mention that it is a brand new place, i am buying off developer.

    offer was accepted on the 14th December. valuation was only done on wednesday 13th January.

    i am afraid that developer is keen to pull out as the asking price for a similar unit on the floor above is now fixed by +25k from my offer.

    this is depressing!
    Originally posted by themdns
    Where has the +25K come from?? Has it SOLD at + 25K? If that was the case the developer wouldn't be pushing you for a completion date he would be handing you your deposit back and your fees!!

    Stick to your guns you can't make the bank move any faster and 6 weeks including Xmas / New year is stretching it really unless you had cash. I take it the property is completely finished?
  • themdns
    I personally could not understand why developer is being pushy. I have never agreed to exchange & complete on the 29th but mentioned I would like to exchange & complete as soon as possible. The apartment is completely finished and is empty since completion probably 2 years ago.

    The similar unit on the floor above is on the market for a fixed price which is +25k of my offer. It is not sold yet though.

    My head is playing games with me, all thoughts coming through like maybe developer been offered 100% cash buy or etc.

    I am a FTB, been saving for so many years and been aiming the particular unit since it came out on the market. I suppose my luck is running out on me eh?

    Thanks Millie for your time and thoughts.
  • PasturesNew

    its not the conveyancers, its def. my boyfriend.
    Originally posted by mel19632
    Never let a bloke near anything important ... they're quite fluffy-headed really.
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