Sued for non-completion on new build? Berkeley Barratt Wimpey Bellway

euanrobertson

Hi all,

I've seen lots of post here over the last 12 months from people who have tried to pull out of new build contracts after exchange / signing of missives due to problems with mortgages, bad valuations, dropping values, unemployment etc.

It seems certain that most will have lost their deposits and many people report being threatened by the housebuilder with legal action for remarketing costs and the subsequent difference in the final sale price, but none have reported back about what has actually happened to them.

I've seen some case history where the loss is limited to the 10% deposit and the builders don't get any more. I've found one case where the judge ruled the purchaser should get 5% back (he'd paid a 15% deposit), so it seems losing the 10% deposit is the norm, but there is provision for the seller to sue for costs and losses.

Can anyone share their story?

Anyone actually been sued by any of the big housebuilders? Barratt? Berkeley? Bellway? Wimpey? etc.

I signed up to by a new build in East London last year and since then the valuation has dropped £140k along with the LTV on the mortgage, so its a double whammy. Completion due in March 09.

Berkeley Homes are refusing to negotiate, don't return my calls etc. I wrote to their Chairman and got a rude letter from their MD saying they won't renegotiate. I've explained my situation and offered to complete at the most recent RICS valuation (I have an approved mortgage, but its been reduced based on the most recent valuation). I've also offered them the contracted price if they provide a superior plot which will stand up to valuation. They still refuse to talk.

The MD didn't respond to a number of issues I raised in the letter - the most pressing one is that his staff continually cite valuations, but refuse to give me sight of them, make excuses, don't respond etc.. Indeed, they come on the phone saying Colleys, Countrywide valued it as £x's, yet when I appointed Colleys the same guy didn't value it within a mile of what Berkeley claim. This seems to be a routine ruse which all the builders a playing.... I've asked them for copies - no reply!

Theoretically they can sue me for failing to complete, and my legal advice has confirmed it, but I can find no recent case history to give any indication of what is happening in the real world. Are builders like Berkeley actually attempting to sue purchasers for non completion? I imagine that there must be huge numbers of people in this situation right now.

So anyone been sued? How did the court find?

Anyone in dispute with Berkeley - please get in touch!

david29dpo

As far as i know, the 10% deposit is for that very reason, compensation for the seller for non completion. No more no less.

Hippychick

The contract for sale incorporates the standard conditions of sale, this stipulates that in the event of non completion the seller is entitled to recoup a deposit of 10% of the agreed sale price from the purchaser. Unfortunately you have entered into a legally binding agreement and should either pay the agreed sale price or take the hit and pay them 10%.

It makes no difference now if the valuation has dropped. You entered into a legally binding contract and agreed to purchase at a set rate. I would imagine the courts would not find in your favour otherwise everyone would be trying to get out of their contracts.

Trollfever

Caveat Emptor.

LittleTinker

Exactly ^^^

This is exactly what the risk is....and why people choose to take it on new builds.

whathavewedone

I don't think you're going to be able to get out of this.

Back in 2000 when I was doing conveyancing I had a lot of work from a guy who was buying flats in East London off plot and selling them on the day of completion for a considerable profit. Often he didn't have funding his place on the day and the developers would issue notices to complete etc and he would have to pay at the contractual rate until able to complete.

The builders weren't saying, well when you bought the property was worth x now it's worth 100k more so pay us the difference please.

You have to pay what you contracted to pay at the time of exchange. You can't negotiate afterwards. It makes no odds if the value goes up or down. If you can't get a mortgage because of the valuation then you're going to have to default and pay the contractual penalties.

I really can't see new laws being introduced to force anyone whether they are a company or an individual to sell at a lower price after contracts have been exchanged. It would make a complete mockery of the whole system.

Your lawyers would/should know if there have been any recent changes in the law.

Sorry but I think you need to accept the (admittedly horrible) situation that you're in.

euanrobertson

Thanks for the useful comments so far. No thanks to the trolls!

I am not looking for opinions on this thread.

I am looking for people who are in the same situation. If you are not in this situation, please do not post.

I also see one or two or the responses have misunderstood the question - I am not seeking a change in the law and I am not complaining about loss of the deposit.

I am simply looking to find out how the current law has been applied to recent cases. Ie. who has found themselves in court and which way did the judge find?

The most widely publicised case was Aribisala v St James Homes. He lost his deposits, but this case underlined the fact that even if the contract says you waive your rights to challenge loss of the deposit, it doesn't apply as the court still reserves the right to make that judgement. While Aribisala was unsuccessful in having his deposits returned, the builder was not allowed to sue him for further costs.

This case is now being used as a basis for others, but results are hard to find. The Times recently reported that judges are now looking at the economic impact on both the purchaser and the seller and are taking into consideration the unusual situation in the financial system.

So I am looking to hear from people who have perhaps lost their deposits, but I wonder what happened after that? Was that the end of it? Or was there more?

silvercar

We have had some interetsing threads on this subject, discussing whether the builder has the right to pursue you for further losses if the resale loss is more than your 10% deposit.

The general consensus seems to be that the builder could pursue you for all losses incurred because you didn't complete at the agreed price. This would require a builder to stand up in court and explain that the contract was fair, even though they never supplied a property of that value (being that the property was not built at the time that it would have been worth that amount.) The bad publicity generated may do more to harm the builder's future sales than the amount secured in compensation.

silvercar

http://forums.moneysavingexpert.com/showthread.html?t=1292827&page=2&highlight=times+court

poppysarah

If all the risks aren't explained to you AND they make you use their recommended solicitor then it's very unfair.
But if you're swayed enough to buy *the most expensive thing you'll ever buy* using the seller's recommended solicitor then it's your own look out.

Dithering_Dad

Interesting how those buying off plan were happy to 'bank' the profits from rampant HPI and are now expecting to be bailed out now we have rampant HPC.

I think the builders should be allowed to horsewhip ayone who reneges on a deal. At the very least, we should bring back the Stocks and throw rotten fruit and veg at them.

I'm such a hand-wringing liberal. :rolleyes: