New Build - Section 38 Agreement query

abbieno7_2

Hello

We have this week signed the contract/transfer deeds for a new build property. The solicitor has informed us that the last phase of the development (where our house is) hasnt yet got a section 38 agreement in place so is suggesting telling the builders solicitors that to safeguard us she is going to keep £500 back just in case the builders ever go into liquidation prior to the road becoming adopted. I'm not sure that the builders will want to agree to this and we are also anxious that the lender (Halifax) may have concerns about a section 38 not being in place. Does anyone know anything about this please as we are FTB's and haven't a clue!!

Thanks a lot

TonyMMM

You're paying your solicitor for his/her advice ......listen to it.

Richard_Webster

It is unfortunately very common. Halifax will need to be consulted and their surveyor might want a bigger retention and your solicitor will then tell the builder it will have to accept it. In the boom period lenders got very lax about these agreements and seemed not to worry about them and had "arrangements" with a lot of big developers that they wouldn't worry about the lack of a s38 agreement.

Usually it is a combination of the builder not being bothered about it and being more keen to finish and sell the houses and the Highway Authority's admin being slow and cumbersome. If the lenders refused to proceed then the builders would suddenly be rushing around getting these agreements signed and it would be a good thing.

abbieno7_2

Thank you so much for your response Richard.


We have been told today that exchange has had to be put back until mid to end of next week now - we were meant to exchange on Weds 30 March but our solicitor had to fax the Halifax to get a response re the s38 and was told when she chased it yesterday that they work to 48 hour timeframes to respond to faxes. Now when she chased today they have told her to call back middle of next week. Should we be worried do you think? I have been so paranoid about this whole thing since day 1 - have you ever heard of a lender pulling out due to this kind of thing?

Thanks again, i really appreciate your comments