struggling to complete on apartment purchase

homerton1

thanks for advice

bingibongi

Why on earth did you exchange contracts without stipulating a long stop completion date and even worse without having a mortgage in place !!!!

Fire_Fox

bingibongi wrote: »

Why on earth did you exchange contracts without stipulating a long stop completion date and even worse without having a mortgage in place !!!!

Mortgage offers usually last six months. It is commonplace for their to be more than six months between exchange and completion in the case of off-plan new build purchases. The risk is that you cannot get another mortgage offer, either because your personal circumstances change or because the value of the property falls in the intervening months/ years. That is why off-plan is a gamble.

dopester

OP, there is very interesting info in this article from October 2009.

A few snippets...

One-by-one, some of the would-be buyers missed their completion date on the restored apartments with laminate floors and fitted kitchens. As a result, the bills built up for the developer which was expected to repay bank loans and pay contractors. "It is unfortunate that the recession hit when these flats' contracts were due to be completed. If all the contracts had have gone through the indebtedness to the banks would have been paid off in full," says Mr Stirland.

LEGAL REMEDIES
Order of Specific Performance: An injunction to make a buyer perform his or her part of the contract and complete on the purchase agreement
Rescind the contract: The seller cancels the contract, keeps the deposit and retains the property in an attempt to resell it
Rescind the contract and sue: The seller goes to court to claim any unpaid deposit and then tries to resell
Damages: If successful, the buyer who pulls out pays the seller the difference between the contract price and the value at the date when completion should have taken place

However, while the financial benefits are obvious for the creditors, the would-be buyers could face legal action.

"You have a developer who has potentially lost out, and you have some contractors who were dependant on the developer getting paid," says Mr Stirland.

"You are affecting the lives of quite a few people, so you have to marry that with one or two individuals who wanted to make a profit and have been unlucky in the timing of their investment."

More and more of these cases are being heard in the courts, where profit-chasing buy-to-let investors are getting stricter treatment than homeowners during the recession of the early-90s, according to Jeremy Raj, head of residential property at City law firm Wedlake Bell.

But instead of just taking the deposit and selling the apartment to somebody else, some developers are seeking orders requiring "hundreds" of customers to keep to the contract and buy the apartments.

"There is a worryingly widespread and entrenched belief among buy-to-let investors that if they decide to withdraw from a purchase for which they have exchanged contracts, that only their deposit is at risk," says Mr Raj.

"The legal position is quite clear. They are legally obliged to complete on the transaction.

"Damages are not even restricted to the difference between today's market price for that property and the price they contracted to purchase at."

The legal term of this process of forced purchase is an order for "specific performance" - an injunction granted by a court which has fairly broad discretion.

Full article here. It is all part of the education for those who thought it was always Happy Days / endless money / MEW paradise / property only goes up in value. If you're signing contracts where you agree to pay £xxx,xxx in the future, think very carefully about the obligation you are taking on.

http://news.bbc.co.uk/1/hi/business/8287828.stm

Richard_Webster

Quote:
Originally Posted by Richard Webster
Did your solicitors warn you of the risks of buying off plan with no certianty of a mortgage?

If not sue them.
How can a solicitor be held responsible for the financial circumstances of an individual some years later?

Indeed, it would be nice if we weren't liable and people were required to use common sense - but there is always going to be somebody out there who says that he didn't realise that he would still be bound to complete the purchase even if he didn't have a mortgage offer.

This is a general comment because I think in this case OP admits his solicitor did warn him.

homerton1

I did have a mortgage offer this year but the developer fell out with builder and delayed for 4 months so the mortgage offer ended before the development finished.

roger196

Richard_Webster wrote: »

Indeed, it would be nice if we weren't liable and people were required to use common sense - but there is always going to be somebody out there who says that he didn't realise that he would still be bound to complete the purchase even if he didn't have a mortgage offer.

This is a general comment because I think in this case OP admits his solicitor did warn him.

A solicitor who is on the ball, would have included a clause in the contract that it was conditional on obtaining a mortgage. This is common in France under Loi (law) Scrivener.

(p167)

Trollfever

THE owner of the city centre's £12million Zero 4 apartment block has won a landmark court case against one of the people who reneged on buying flats.
The High Court, in Bristol, has ordered the person to pay a whopping £133,282 in damages, costs and interest to Plymouth's Prestige Homes South West Ltd, after pulling out of a deal to buy two Zero 4 flats.
That person will have already lost a deposit, and does not have the flats any more because the contract was rescinded.
Prestige Homes, part of the London and Westcountry Estates Group, said the result was only what it had been expecting.
It is also dealing with about another 20 people who backed out of deals after buying off-plan.
They are among about 30 people who initially paid deposits, on 54 flats, but tried to walk away when property prices started to tumble in mid 2008.

http://www.thisisplymouth.co.uk/news/Developer-wins-163-133-000-landmark-ruling-flats/article-1586084-detail/article.html


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property.advert

roger196 wrote: »

A solicitor who is on the ball, would have included a clause in the contract that it was conditional on obtaining a mortgage. This is common in France under Loi (law) Scrivener.

(p167)

I had this clause inserted as well as lowering the deposit to 5% due to the long lead in time. However, this was in the 1990s and property prices were going up. Mine was 50% more valuable than the original price come completion.