House retention for unfinished roads.

tarajayne

We bought our house but knew that the roads weren't finished so the solicitor advised keeping a £5k retention which we did. The builder got into difficulties and many people buying after us got some great deals as he was desperate to sell. Good on them, I bear no sour grapes as we would have done the same. DH advised many of them at the time to get retentions but they decided not to fight for one as they had had tens thousands off the price. One such neighbour spoke to me just now, she paid £50k less than next door for an identical house but they have no retention for the roads, she was talking about what's happening with the County Council. They are doing part of the estate roads but not out cul-de-sac or the larger one at the top, we have to pay to get those completed ourselves. Now the important bit....we had it in our heads that the cost would be split equally, then say if it was £6k we would top up our £5k by £1k. If it was less then our £5k would just stay in the pot leaving less for everyone else to pay. She sees it differently, as do some others apparently, she think those of us with retentions should put it all in, then what ever the remainder cost is split that equally between everyone, including us. What do you think? Does anyone know what happens?

tarajayne

It seems unfair that our retentions are helping everybody when they chose not to, and also we will have to pay a solicitor to get ours back from the builders solicitor.

WestonDave

They are trying to have their cake and eat it. Either the cost of your house (including the £5k) is inclusive of doing the roads - in which case your £5k goes into the pot and whatever it costs over that is spread between the others with no further call on your funds but no refund to you (so risk free both ways to you). Alternatively you all bear the same risk now and your £5k goes towards your equal split of the whole cost. Those are the two equitable solutions.

In terms of the legal aspects presumably your £5k is still with your solicitor and won't be handed over to the builder unless they do the roads, and if not it will be returned to you. In terms of getting the road done, either you all agree to fund it or it won't get done as there isn't a lot "she" can do to force you into a deal you don't want. Her trying to set up a deal which unfairly penalises a number of the households simply dooms the whole thing to failure and the road won't get done.

Richard_Webster

You need to look at the precise terms agreed about the retention - the circumstances in which it could be released and to whom an d in what amounts. Unless we know what was agreed we are merely speculating.

tarajayne

The money is with the (gone bust) builders solicitors. So our solicitors has contacted them. I just don't get what she is saying. Our retention was our sort of insurance against this happening. What was the point of it if we have to pay anyway.

tarajayne

Richard_Webster wrote: »

You need to look at the precise terms agreed about the retention - the circumstances in which it could be released and to whom an d in what amounts. Unless we know what was agreed we are merely speculating.

I've been through all our paperwork and can only find one line referring to it. I presume our solicitor will have this information?

tarajayne

But how does that that help decide the situation with who pays what?

silvercar

Either (a) the builders solicitors will arrange for the money to be released to pay for the road being done up or (b) the builders solicitors will return the money to you.

Given that solicitors aren't in the business of supervising builders and the builders no longer operate, the most likely scenario is that the solicitors will return the money to you. Possibly as part of an agreement where you sign that they have no further liability to you. Otherwise they could hold the money indefinitely, given that the builders are never going to complete the work.

These retentions are not to cover the cost of the work, they are there to ensure that the work gets done. So there is no direct link between the cost of the work and the retention.

The most likely scenario is that you will get the 5k back and all the neighbours will have to decide how and when the work will be done.

sonastin

Do you know how much the road is going to cost and how much is available from the combined retention monies? Remember that the retention is actually the builders money not yours, so if between you it completely covers the cost of the work that needs doing then you should be chucking the whole lot in the pot. In theory, anything left over when the road is finished should be going to the liquidator to pay off the builder's other creditors. If there is enough retention between you to cover the cost of the work, the argument with your neighbour is unnecessary so you can drop it now before you reach the point of bad feeling.

However, if a top up is necessary then you do need to reach an amicable solution. How many have retentions and how many don't? This has the potential to spoil neighbourly relations for years to come so you need to tread carefully. Objectively I can see merits in both arguments so it is down to what sort of agreement you can reach with the rest of the community.

tarajayne

sonastin wrote: »

Do you know how much the road is going to cost and how much is available from the combined retention monies? Remember that the retention is actually the builders money not yours, so if between you it completely covers the cost of the work that needs doing then you should be chucking the whole lot in the pot. In theory, anything left over when the road is finished should be going to the liquidator to pay off the builder's other creditors. If there is enough retention between you to cover the cost of the work, the argument with your neighbour is unnecessary so you can drop it now before you reach the point of bad feeling.

However, if a top up is necessary then you do need to reach an amicable solution. How many have retentions and how many don't? This has the potential to spoil neighbourly relations for years to come so you need to tread carefully. Objectively I can see merits in both arguments so it is down to what sort of agreement you can reach with the rest of the community.

The neighbour in question moved in and against the advice of my DH didn't get a retention. They did however get a £50k reduction off the price. The builder that is named on our contract actually dissolved that part of the business, so it didn't go into liquidation. I've literally just found that out, not sure if that makes a difference? Long story but basically he started about 5 different companies whilst doing the development using different ones to sell different parts. I am thinking we should just get our cul-de-sac done, and leave the top cul-de-sac to those residents. 50% of the estate is covered by a Section 38 so those residents aren't involved. Our cul-de-sac isn't too big, there are 4 private homes, and 3 housing association. Us being the only house with a retention.

Richard_Webster

Ask your solicitors what terms they agreed with the builder's solicitors about the retention.