exchanged contracts on first house... then heard rumours of redundancy

haizee

Hi I really need some advice, I currently rent a house with my boyfrind and we are buying our first house, we have just exchanged contracts on a new house, we have a completion date for June, everything is organised and ready to go mortgage due to start 1st July etc.

We both work at the same place and this week there have been lots of rumours of redundancy, they are only rumours, nothing has been officially communicated at the moment and this is the first we have heard about it. Question is what will happen if we both get made redundant? We have committed to buying the property as the contracts have been exchanged but I anticipate that if there is a communication about redundancy it will be made before we complete. Are we able to pull out even though the contracts have been exchanged? I don't expect that the mortgage would still be available to us if we are made redundant but where does this leave us if we are legally bound to handover the money to the developers on completion?

We are buying this house on a easy start purchase where we get a mortage for 75% of the purchase price and the developer basically loans us 25% which we pay back within 10yrs or when we sell, don't know if this makes any difference to where we stand or not.

Any help would be appreciated, fingers crossed our jobs will be safe but better to be prepared for any situation as early as we can be.

Thanks

GDB2222

You can't get out of the contract, so let's hope you are not made redundant.

SplanK

you need to speak to your solicitor about this.... even go straight to the boss with your concerns and see whats going on....

you *can* get out of contract - however it usualy costs and depending on whats been written into the contract - you could be liable for all their charges + interest on the amount of the property...

also if there are rumours - i would suggest starting to look for another job just to cover your own !!! - it might be rumours but you can't be to careful... a company I worked for in the past went bust and then bought out by another company.... a few months later it sank again - i managed just before it sank for the 2nd time

cattie

Note to the op, you should only post a question in one forum only.

This is a duplicate thread with one also posted on the Redundacy board. Can they be merged to save confusion?

GDB2222

SplanK wrote: »

you *can* get out of contract - however it usualy costs and depending on whats been written into the contract - you could be liable for all their charges + interest on the amount of the property...

OK, so you think it's possible. Please explain.



Hums to himself and drums fingers, whilst waiting patiently .....

SplanK

yes.... when I exchanged contracts for our house it was clearly noted that once exchange contracts, that if either party failed to complete or exited the contract... any fees encured by the person not exiting the contract were to be paid by the person cancelling..... also if i remember rightly, i think there was a 30% of the house value to be paid as well by the person exiting to the person not...

it all depends on how the contract is drawn up... and chanced are it will work out very costly!

from what I remember been explained to me... Exchange of contracts is just that - you are exchanging details of the sale, T's are crossed, and i's are dotted... the sale has not gone through but it makes everything legally binding so at that point if one party was to back out, unless written in the contract to say they cant, but chances are it will cost them. Only the deposit has changed hands that this point which you would loose.... at completion is where the sale actualy takes place... money is transfered, names are sorted on the deeds and what not

SplanK

...and if you google "Exchanged contracts pulling out" - you will find many threads and many "first time buyer guides" which explain it is do-able however very costly!

hence why i suggested speaking to their solicitor straight away and find out whats going on with their boss.... the sooner they let people know, then in theory the better the fall out should be!

LandyAndy

Hmmm. No deposit. Builder subsidising 25% of the price. Pulling out could be even more expensive than buying and selling straight away.

Although, as the OP clearly has no funds, they may not be worth suing?

silvercar

Some iffy advice on here. You are legally bound to the contract. You need the contract to proceed or you will lose your 10% deposit at the very least and could be liable for any losses the seller makes in reselling the property.

Once you mention it to your solicitor, he would be duty bound to mention it to the lender (as he also acts for the lender). In this market the lender could get jumpy and ask for an employer letter saying your jobs are safe. Without it the lender could withdraw the offer leaving you in trouble.

Do you have savings? Family to support you? easy to get another job?

If so I would say nothing and proceed.

haras_nosirrah

Do you have redundancy insurance? If you haven't taken it and you haven't been officially told about redundancies maybe you can still take insurance out. Cheaper than negating on the contract.

GDB2222

I agree 100% with Silvercar. The OP said: "We both work at the same place and this week there have been lots of rumours of redundancy, they are only rumours, nothing has been officially communicated at the moment and this is the first we have heard about it." I don't think the OP has an obligation to report gossip to her lenders (and it's clear from her post that it never crossed her mind that she might have). As Silvercar said, reporting the gossip to the lenders could have disastrous results for the OP.

Also, if you are not in a position to complete the contract, as even SplanK agreed, it becomes extremely costly. The builders can sell the house for the best price they can achieve fairly quickly, which might be a lot lower, then come after the OP for the difference. By the time they've added on legal fees, lost interest, marketing costs, etc, that could (just to pick a figure out of the air) come to say 30% of the value of the property. The builders are allowed to keep the whole of the deposit even if they sell the property for more than the OP's price.