Can a bank repossess a property after exchange of contracts?

GDB2222

tyllwyd wrote: »

Yes, but I assume the house has been off the market while the OP has been going through the process of buying it - so they would have taken away the chance of the original vendors marketing it in the meantime to someone who was able to proceed before it was repossessed. The OP would end up with legal bills for work that the solicitors have already done, the vendors would end up with bills from their solicitors - all for the possibility of trying to screw the vendors down for a few thousand pounds more.

Fair enough if everyone does their best and they still can't stop the bank repossessing, but to pull out at this stage just to try to get a better price seems like a very underhand (and risky) strategy to me.

All good points - I did say that I was being ghastly for the moment.

taxsaver

At the end of the day your solicitor works for you, so if you instruct her to exchange then she must.

If you have exchanged and then the bank repossess it I cannot imagine that they would not be bound by the contract (maybe I'm wrong), plus they would have every reason to sell to you without all the usual advertising etc., as that is only done to protect the bank from an accusation from the borrower that they have sold at under-value.... the borrower would not be able to do that if it can be shown that they had already exchanged at the same price as the bank then sold to you for!

If it were me I would push my solicitor on these points in order to ensure that i got my 'forever' property!

GDB2222

taxsaver wrote: »

If you have exchanged and then the bank repossess it I cannot imagine that they would not be bound by the contract (maybe I'm wrong)

Richard Webster, who is a solicitor, has answered this question already, and he says the bank would not be bound by the contract. In practice, you are right, they would normally be pleased to see this go ahead and to get their loan paid off without repossessing.

DVardysShadow

GDB2222 wrote: »

Richard Webster, who is a solicitor, has answered this question already, and he says the bank would not be bound by the contract. In practice, you are right, they would normally be pleased to see this go ahead and to get their loan paid off without repossessing.

Agree.

More colour on this picture. If the selling price exceeds the amount outstanding on the mortgage, they will be pleased to let it go. If it is less, they could be very reluctant and could be expected pull the rug from under the deal.

sonastin

If the bank repossessed when a sale was in progress then you could argue that they would be failing in their obligation to mitigate the debtors losses. There is always a grey area about whether a "sale" is actually going to complete so you can understand banks not hanging around just because the homeowner claims to have a buyer but when you've exchanged there is no grey area - there is definitely a buyer.

I suppose from a black-and-white legal point of view, if you exchange and then it is repossessed, you can sue the vendor for failing to complete. But in practical terms, you now know that the vendor has nothing left so you'd be suing for three tenths of b*gger all!

madmish00

More colour on this picture. If the selling price exceeds the amount outstanding on the mortgage, they will be pleased to let it go. If it is less, they could be very reluctant and could be expected pull the rug from under the deal.

I can't get any information from anywhere as to whether it is in negative equity. We are buying for £12k less than the vendor paid in 2004 so potentially depending on how much deposit they put down when they took the mortgage or if they have subsequently remortgaged.

taxsaver

Richard_Webster wrote: »

Nothing to stop the bank repossessing form a legal point of view. Most wouldn't, but solicitor is right to want to get the assurance in writing.

GDB2222 wrote: »

Richard Webster, who is a solicitor, has answered this question already, and he says the bank would not be bound by the contract. In practice, you are right, they would normally be pleased to see this go ahead and to get their loan paid off without repossessing.

He didn't say that the bank would not be bound, otherwise I would not have made my point, he merely stated that the bank could still legally repossess!

PasturesNew

On HutH when people have bought repo's, it's quite a few times that the buyers at auction were people trying to buy it before it went to auction - and, more often than not, they got it cheaper.

That doesn't help if you really, really want it - and it does get repossessed, but there's a glimmer of hope that you could still buy it at auction at a discount.

chappers

sonastin wrote: »

If the bank repossessed when a sale was in progress then you could argue that they would be failing in their obligation to mitigate the debtors losses. There is always a grey area about whether a "sale" is actually going to complete so you can understand banks not hanging around just because the homeowner claims to have a buyer but when you've exchanged there is no grey area - there is definitely a buyer.

But depending on the mortgage amount outstanding and the sale price they may not be willing to release the charge on the property, as DVS said.
The OPs solicitor is right to want clarification both from the point of veiw of potential repossesion after completion and as to whether the sale is likely to complete in the first place.

GDB2222

chappers wrote: »

But depending on the mortgage amount outstanding and the sale price they may not be willing to release the charge on the property, as DVS said.
The OPs solicitor is right to want clarification both from the point of veiw of potential repossesion after completion and as to whether the sale is likely to complete in the first place.

The bank can't repossess after completion, because it will be a condition of completion that the mortgage is paid off in full.

The real problem the OP faces is that he pays his 10% deposit, but then the seller can't complete. You'd think his deposit would be safe, but under the standard contract terms, the seller can use the deposit as his own deposit if he is buying somewhere else, so the OP could lose his deposit as well as not getting the property.