Is this legal?

BurningMad

I don't really know where to begin here so I will try to be as concise as possible.

Around 8 weeks ago an offer was made on our house by a supposed property management company. They offered a lot less that we were hoping but the estate agent told us:

It would be a quick transaction; Cash buy; No survey was required; Not even a viewing of the house was to be made

Because of this, we decided to accept the offer as we believed it would remove a lot of the stress we had so far gone through. We have been trying to sell our £90,000 house in South Wales for over 2 years!!!!!

We all assumed they would be buying to renovate and maybe turn into flats.

To cut a very, very long story short, all this has changed. Since then, they have tried to find a buyer to buy the house from them as soon as they have bought ours. So they would literally own it for a few days and then sell it on. In turn this has meant that they have had a survey done and we also had to show this person around the house for them!

Since then this has changed and they are now buying it for their own purposes.

My question:

We had to use the solicitor they wanted us to use. They are using a separate solicitor for the buying process but they insisted that we had to use the solicitor they stated. In fact, if we didn’t use him, they would not buy the house.

Apparently when the house sells, the documents will state they have paid us £10,000 more than we will actually get to pass onto our next house purchase.

We (well the solicitor) will in turn pay back the £10,000 to them immediately upon completion.

Is this legal? And why would they want this to be done? The solicitor says this is perfectly okay but I don’t trust him, if I am being honest.

I am at my wits end with worry. The estate agent hasn't been that helpful and keeps telling us everything is okay even though the buyers keep moving the goal posts. I am doing most of the leg work and I end up telling the agent information rather than the other way round!!!

00ec25

you feel you are being ripped off, have you exchanged contracts yet?

if you have - tough, there is nothing more you can do about it, unless you want to engage in vengance for "your" perceived rip off, then their business practices are not your worry

if you have not - do you feel bad enough to walk away?
if not then carry on, you have been waiting 2 years to get to this point after all.

BurningMad

Nothing has been exchanged.

I just want to know if anybody has ever heard of this money transfer process before and if so, what the purpose of it is.

I don't wish to be on the wrong end of illegal practices.

princeofpounds

No, it is possibly not legal.

If they do not report the correct net-of-incentives valuation to the land registry they are engaging in a practice which aims to fluff up the recorded value of the house in the land registry. This itself is not necessarily illegal, but it becomes fraud and much more serious if they then use that value to obtain a loan. Are they cash buyers or not?

I recommend pulling out. In fact, I would never recommend using a solicitor not of your choice to represent you.

If you want to punish them, you should probably try and get some kind of written evidence out of them that this is what they want to do - perhaps ask the solicitor to explain over email how it should work, play a bit dumb. If they do have a lender, report it to the lender and report the solicitor to the law society.

Mind you, you might just want to stay out of it.

Gwhiz

Seriously, why would you want to be involved with a bunch of lying crooks?

keith969

Sounds to me like they are going to make an immediate £10,000 profit on your house by fooling their buyer into thinking you've sold for more than they really paid.

Basically you're being swindled. The fact that they insist you use a solicitor specified by them should have rung the alarm bells.

BurningMad

Thanks for your reply.

This is where it becomes a bit of a grey area.

The original intention was for a cash buy.

It then changed and it was then going to be a mortgaged buy using this £10,000 as a means to obtain more money than they could actually get. The solicitor said it was okay and was only being done so they wouldn't have to worry about putting money in for a deposit.

It is now supposedly a cash buy.

They have been altering the rules from week one so with the change of weather comes a change of plan.

The agent advised us that all was well but I just think they can see the ££££££ signs for their commission.

clutton_2

Altho these are quite odd ways to go about things - many property traders work like this - they are buying your property below the market value and have no deposit to put down. i do not think there will be any come-back on you if you sell to them - as long as your solicitor knows exactly what is happening and advises you accordingly.

The tax man will probably investigate the purchasers when these practices are brought more into the open in future years - and it will be them who will be investigated - not you.

if you want to sell your house and you accept the price - then go ahead.

poppysarah

BurningMad wrote: »

We had to use the solicitor they wanted us to use.!

Alarm bells should have rung at this point. Why can't you use one of your choosing? Because there's something dodgy going . and yes I know new builds almost always insist on this and hey - look at the mess new build over valuations etc have caused

will-in-estoril

It stinks.

Remember YOUR solicitor is there to represent YOUR interests. In your case you are not even having a say in who it is.

You could report him or her to the SRA.

silvercar

I agree with clutton, any illegality is on their side not yours.

You are selling for say 90k with a vendor gifted deposit of 10k, so you get 80k. They get a property that looks on land registry that it cost 90k, if they do get a mortgage they could be getting a 90% mortgage ie 90% of 90k=81k, so they buy your property without putting any money down. When they come to sell on they hope to attract buyers easier by pointing to "evidence" that they paid 90k. This gives them the advantage that they don't look to be making too much profit and any capital gains tax would be based on the 90k purchase price (if the 10k disappears elsewhere).

If they really are getting a mortgage then the whole deal could hinge on the valuation. If it is not valued at 90k, they will have a problem. I guess they also know a tame valuer. If they are getting a mortgage then they should be declaring that they have a vendor gifted deposit. If they don't they would be committing fraud, obtaining money by deception...

You are doing nothing wrong. Selling a property and giving a vendor gifted deposit is not illegal. Developers do it all the time in the shape of stamp duty refunds, free carpets etc.

My bet would be that you will be signing an assignable contract, nothing wrong with that; at exchange it just gives the buyer the right to assign the contract to someone else to complete, that way they may be able to avoid declaring the gifted deposit.

I would go ahead, though possibly continue to market the property in case it all goes pear shaped.

Your doing nothing wrong, the buyer is engaging in sharp practices, the solicitor is one who is carefully treading a line to keep everything just this side of legal. Something that a lot of solicitors wouldn't do, hence the careful choice.

Bottom line is whether you are prepared to sell your property at that price.