Legal sale or not

renovation_man

My son and his girlfriend are in the process of buying a property on the first phase of a private development, the first phase is incomplete and the developer has an illness and has gone into liquidation.

Another developer was supposed to take over the 2nd phase but would have to adopt the unfinished works etc of the 1st phase.

They have paid in my opinion extortionate fee's to their surveyors, solicitors etc as they have to rent their existing house and raise some money on it for a deposit, they have signed a contract been given a a date of moving in as the 19th May, however it now seems that the developer has not signed his contract to adopt the 2nd phase and their moving date has been delayed.

Could somebody advise if they had the legal right to sell this house in the first place as it is not completed and they would have sold it on the presumption that the developer would sign.

In my opinion the estate agent or receiver should not market the houses until all procedures are in place, they are not the only ones in this situation so would like to try and help get their money back without the expense of other solicitors.

I would appreciate any advice

G_M

Two things are unclear to me from your post:

1) has the 'new' developer actually taken over the liabilities of the original developer? If not yet, then they have no right to sell the properties.

2) has your son acually got a contract exchanged with the original (or indeed the new) developer? 'Signing' the contract does not mean the contract exists, unless the developer also signed, and the contracts were exchanged.

Is your son using a solicitor? (You mention solicitors costs). If so, he should be advising!

renovation_man

Thanks for your reply, the developer has not signed to undertake the other liabilities, the solicitor was appointed by the estate agent I believe. I have not asked for many details as they like to be independent but think it's time to try and help. I shall ask for more information tomorrow and post on the subject again.

Emmzi

paying a deposit =/= contracts being exchanged.

Why has he paid for a survey on a new build qthat isn't even finished yet? I suspect he only has a solicitors bill.

Also I'd just be buying somewhere else. This all sounds very painful. I'd ask the recivers for my deposit back or if it were under a grand think it well worth it to not hae to deal ith the position.

go_cat

My concern would be if the development doesn't get finished / gets sold off cheaper - what would happen to the value of your sons house then?

G_M

And as an aside, advise your son NEVER to use the estate agent recommended solicitor.
* the EA works for the seller/developer - not your son, so is biased
* the solicitor will be paying the EA an intro commission for the business
* the solicitor's firm may even be the same firm acting for the seller/developer - legal (just) if done right, but clearly a risk of conflict of interest.

always find/instruct your own completely independant solicitors.

maninthestreet

Since when did EAs start 'appointing' solicitors to act on behalf of buyers??

renovation_man

I think its going to be a bit complicated, the EA was appointed by the receivers I think. There is a meeting with the new developer later in the week.

renovation_man

Is this a mess, I have spoken to the developer and he said he has signed a contract with the receivers and they have given him a year to complete.

They have had a mortgage offer but they want an indemnity policy in place before they proceed with the sale, but who does it come from. The developer says it's nothing to do with him as he hasn't paid for it yet. They have went to a financial adviser who has obvioulsy given them bad advice, he recommended the solicitors which are in Sussex instead of local companies and I believe thay should not have started any searches, valuations, surveys etc until they were sure that sale could be completed.

There's loads of work to do on this, I think the first step would be the financial adviser and ask him his reasons.

They have changed their sons school, they have rented their house and the tenant was supposed to be moving in next week, they in turn have given notice to their landlord.

They stand to lose a couple of grand at least, maybe legal advice and try to claim from the adviser???

JQ.

I still don't understand, has your son actually exchanged contracts? If not just walk away, move into rented and start looking again. If they have, how, if the developer is unable to complete? Even, if your son does complete then they could be entering the nightmare situation of living on incomplete building site for the next 10 years.

Your son's solicitor needs to be earning their fees and advising you what to do.

I also don't understand what you plan to sue the IFA for - they advise on mortgages, on the basis your son doesn't have one yet, I'd love to know on what grounds you plan to take action.

renovation_man

Who mentioned the word sue? IMHO the FA should have advised them not to start searches, valuations etc until they were positive they could complete.

He advised them to use solicitors 250 miles away who's charges are 3 times higher than the local solicitors.

He introduced them to mortgage arrangers who are charging them nearly £2000 to arrange a mortgage to raise money on their existing home to get a deposit.

And no doubt he is getting a nice little earner out of as well.