Protection for deposit between exchange and completion

pph

We are FTBs and now very nervous about exchange. The seller / seller’s solicitor has been really unhelpful in answering all our solicitor’s enquiries the process has taken ages. Now we are at a point where we are going to exchange, probably this week we will be ready. Our mortgage offer expires in August.

Them taking ages to answer enquiries was frustrating before now but this / next week I we will have to give a 10% deposit upon exchange. What protection do I have against them somehow being unhelpful again then blaming it on us (this has happened already on a number of issues, we were found never to be at fault) and trying to keep our deposit? Examples of their incompetence so far:

- The place is a share of freehold. Despite kicking off the legal process in February, they only got the ID1 form giving the co-freeholder’s details last week.
- The share of freehold has two leases as in this arrangement http://www.houseweb.co.uk/house/forum/Forum4/HTML/000110.html i.e. a lease for each of the two flats. They kept sending back lease enquiries with “this is not a leasehold, it is a share of the freehold”
- They said they didn’t need to supply a gas safety certificate when in fact the boiler is pretty new and fitted by them.
In the end, it turns out that their solicitor was forwarding on all questions, drawing blanks on the answers and then forwarding these blanks to my solicitor without checking. Another example:

- Q: Is the property subject to flying freehold?
- A: What is a flying freehold?

In each of these instances, they claimed it was us / our solicitor that did not understand the process. As I said, quite frustrating before, but now I am worried about putting our 10% down in case these such problems continue between exchange and completion.

My two questions to the money saving community are:

1. What actions does the seller have to conclude between exchange and completion other than winding up their mortgage?
2. (Most importantly) – If I pay the 10% deposit immediately upon exchange and then the balance that the bank requires upon completion, is there room for them to drag their feet or slow play the situation, then claim it was us and pocket our deposit?


I know my solicitor should answer this but whilst she has proven herself to be most competent and is very helpful, she is equally (more?) accountable to HSBC due to their wonderful panel system. Thanks HSBC, sometimes I get the feeling that she is acting to keep things smooth and get the sale done as much as protect our interests. That is only my opinion, maybe she it just giving them the benefit of the doubt but given the above I would say the seller / their solicitor is a liability.

Please help with questions 1 and 2!

00ec25

once you have exchanged then both parties are legally committed to complete

if either party fails to do so the other party gets to keep the deposit, that is why it is a deposit - to ensure there is an inducement to "behave" and deliver on the contract you each signed

so you will get yours back if the fail to complete

kingstreet

00ec25 wrote: »

once you have exchanged then both parties are legally committed to complete on the date agreed between both parties on which exchange was based.

if either party fails to do so the other party gets to keep the deposit, that is why it is a deposit - to ensure there is an inducement to "behave" and deliver on the contract you each signed

so you will get yours back if the fail to complete

Just wanted to add a little bit to what you said.

pph

Thanks both - I am all too aware that I am legally bound to purchase after exchange. If I don't I lose 10% of the property value, wheras they lose virtually nothing and potentially pocket my deposit.

So the questions remain, what protection do I have? What actions can they potentially drag their feet on and then try and say it was us?

What I'd like to hear is "If you put your 10% deposit down upon exchange, the law will protect you enough. Just do your bit and it will be OK". Is this the case?

Thanks!

rpc

Your protection is your contract. You can go to court either for the deposit back or to sue for "specific performance" i.e. do what the contract says.

One story where the sellers tried to pull out is here https://forums.moneysavingexpert.com/discussion/1806123

hazyjo

Drag their feet with what? Everything must be sorted out before exchange. All questions answered, all forms returned, all searches back, etc.

You won't be allowed to exchange if everything isn't in place.

Jx

pph

rpc wrote: »

Your protection is your contract. You can go to court either for the deposit back or to sue for "specific performance" i.e. do what the contract says.

One story where the sellers tried to pull out is here https://forums.moneysavingexpert.com/discussion/1806123

Hi, thanks for that. TBH I am not fearing them pulling out - if they do, I will live with it. What I am most worried about is them pulling out, somehow pinning the blame on us and pocketing the deposit. The thing is, as above, they have form for not doing what is needed then pointing the finger.

hazyjo wrote: »

Drag their feet with what? Everything must be sorted out before exchange. All questions answered, all forms returned, all searches back, etc.

You won't be allowed to exchange if everything isn't in place.

Jx

So you reckon that once my solicitor has signed off and said exchange is ready to go, we should just transfer the money and then the balance to pay HSBC their equity demand upon completion and then sit back and let the law protect us? If this is what people do, i.e. the finishing line for risk on our side is the exchange, then that's fine with me. Just as a FTB, I am not so knowledgable and value the advice here. :T

hazyjo

I can't see how they could pin the blame on you. Your completion date will be fixed on exchange. If you're that worried, aim for a short gap of say a couple of days between the two.

Still a little confused on what you think the vendors are gonna do. It is not in their interests to delay the sale after exchange as they will be liable for costs. I cannot think of anything they could 'pin on you' if they pulled out. Your solicitor should have everything in order before agreeing to exchange. If they haven't and you are forced to pull out, sue them!

FYI, it is very uncommon for purchases to fall through between exchange and completion. Most solicitors (TTBOMK) never experience it in their careers.

Jx

zappahey

pph wrote: »

and then the balance to pay HSBC their equity demand upon completion

Pay what to HSBC?

chappers

Dont go panicing about this, housebuying/selling is stressful enough. Your deposit will be held most likely by your own solicitor or at the very least by thgeir solicitor and there is alegal framework in place, stating how it should be handled.
Everyone else has pretty much summed it up, don't exchange until everything is in place as if you could complete at the same time.

FireWyrm

unless your solicitor or theirs scarpers with the deposit .......:D