FTB in breach of contract, should we go for the developers offer?

supertaffman

My wife and I made a big mistake last year, we signed a contract to buy a new build. We had a great mortgage deal at the time and wanted to get on the ladder.

Fast forward to summer '08. My wife was not in work so we did not complete on the purchase and are now in breach of contract. Oh dear. It turned out that the completion date was after our mortgage offer expired, so we could never have completed, even if we had wanted to.:mad:

Fast forward to Feb '09. We have had threats of court action hanging over us all winter (we did not pay a deposit, so they want £20k, plus costs, plus maybe other losses etc). Our solicitor got a letter from the developer offering us a 75% shared equity deal with a 5% overall price reduction (that was the "gifted deposit" that we had got in the original deal). We have 10 days to consider the offer before they "take it further".

The original deal was 200k, with 5% gifted deposit, plus some other "extras". I would guess that the house is worth around 120-140k today.

We are renting at the moment and our contract runs out in June, so we could buy and avoid legal action, but the first offer is not really an option because we need help with the deposit. We have discussed the legal action with our solicitor and he says that the claim against us is very strong. We are looking into claiming against our conveyancing solicitor for negligence, but the paperwork has not surfaced yet (they said it would be okay to breach the contract and then did not inform us that our mortgage offer had expired).

If anyone has an opinion on the following points, we would love to hear it:A

1. Do you think we should push for a fairer deal? eg 20-30% price reduction.

2. We still do not have a deposit so that would have to come from the credit card. Has anyone done this in the past and survived?

3. Do you think we should we ask for a deposit from the developer?

4. Is it even possible for a developer to give a deposit and do shared equity on the same deal?

5. Would you rather have a CCJ for 20k+ extras (If they took us to court) or owe 50K that has to be paid back over 10 years?

6. Has anyone done a shared equity deal for more than the value of the property?

7. Has anyone ever sued a solicitor and won?

We are in a real pickle and it would be great to hear any ideas.:T

Supertaffman

silvercar

So your conveyancing solicitor allowed you to exchange contrats in the knowledge that your mortgage offer would expire before the completion date of the purchase. That is fine if the solicitor pointed this out to you and made sure you understood the risk that you would not be abel to get another mortgage. If your solicitor didn't point that out, then he could be quilty of negligence.

You should first complain to his practice, they will have a complaints procedure. If you exhaust the internal complaints procedure then you conplain to the law society.

The choice between 20k CCJ and 50k is not a pleasant one. I would like the developer explain to the judge why they should enforce the contract given that the property was never worth 200k. At the time the contracts were exchanged it was a promise of a property valued at 200k but still a mud site, at the time of completion it was not a property worth 200k but one worth 120-40k. I would guess that the developer will try to negotiate with you as they themselves won't want to go to court, particularly if they know you will defend the case.

Questions for you now are whether you want to buy the house and what amount you can get a mortgage for.

supertaffman

Try to get an improved deal, lower price and deposit, but risk court action.

many thanks for the advice silvercar.

We exchanged contracts in spring, after heavy pressure from the developer (threats to put the house back on the market). The original completion date was early summer, we ended up having a date in early autumn, 2 wks after the mortgage expired.

What would other people do? Court or overpriced house?

We are just starting our family life and feel that we have already ruined it.

elspeth240

I'd seriously look into suing your solicitor first as this would be the best option. Were they recommended by the developer?
Otherwise, - try and negotiate a better deal. Just to warn you, the penalties could be a lot more than 20k. If they remarket the house and it is only worth £140k now and that is what they sell it for then they are entitled to sue you for the 60k loss + interest etc so you could end up owing alot more. The fact that they have given you an option shows that they have tried to negotiate and mitigate loss. If you refuse to negotiate then they will have a strong case against you.
Good luck

terrierlady

which developer was this, developers usally do sales progress chase and know the mortgage expiry date for all purchasers and yes for a solicitor to let you exchange with the mortgage due to expire before build or legal completion seems unthinkable .instead of letters make an appointment to speak with the regional sales manager and try to sort this face to face.Customer care starts at reservation so where is theirs?

supertaffman

Try to get an improved deal, lower price and deposit, but risk court action.

Hi elspeth240, thanks for the reply. The solicitor was pushed onto us by the developer, and we do feel that we were treated badly. We have to wait for them to send us all our paperwork before we know if we have a case or not. It has been 3 months now. The developers case is rock solid, and we are liable for a lot more than 20k. However, we do not have any assets so we are looking at a very large CCJ whatever happens.

Hi terrierlady, it is a small developer. We feel that the solicitor, mortgage advisor and obviously sales exec were all out to pull the wool over our eyes and we signed the contract before we realised what was going on. The original completion date was well before the expiry of the mortgage offer, but then the completion date was changed. I think it's a really good idea to try and have a face to face meeting, at least it means less legal fees!

The best case senario for everyone is for us to buy the property. However, we do not have any cash to pay a deposit, or mortgage/legal fees, which is one of the reasons we did the original deal, so we really don't know how to pitch a counter offer.

Any ideas????????

poppysarah

You were forced to have their solicitor - so you need to show they didn't act in your best interests. I suspect for the saner of us - seeing you in the cack now shows that. Whether that works in court I don't know.

supertaffman

Try to get an improved deal, lower price and deposit, but risk court action.

I agree poppysarah, and the worst thing is, we would have to be sued by the developer and then take the solicitor to court seperately ourselves. That means super high legal fees.

I wish I had a time machine!!!

elspeth240

You really need some independant legal advice regarding suing your solicitor as you have been given some really bad advice. Check your home contents insurance as legal fees for the purchase/sale of property are sometimes covered.