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trying to buy a house... again

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  • bobwilson
    bobwilson Posts: 595 Forumite
    You are probably going to find similar terms in most contracts when buying a house
    Really?....
  • bobwilson wrote: »
    Really?....

    Yes, I was referring to your solicitor not being liable if the bank pulls out before completion and how if the lender pulls out between exchange and completion you will have to pay some money to the vendor. These are not unusual terms.

    The reason you paid your deposit on exchange is that if you pull out after that point the deposit is forfeited. It's not the vendor's problem if your lender decides not to lend.

    As others have said here, one way to get around this is to exchange and complete on the same day or reduce the risk by buying in cash.
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  • bobwilson
    bobwilson Posts: 595 Forumite
    edited 31 August 2012 at 5:19PM
    if the lender pulls out between exchange and completion you will have to pay some money to the vendor.

    *some* money ... but £33,000 ?! you're life savings?? why on earth should anyone do that?! Get money off the lender for pulling out by all means, but not the buyer!
    The reason you paid your deposit on exchange is that if you pull out after that point the deposit is forfeited.

    yes, if *you* pull out, that I can understand, but not if the mortgage lender does! That may be a default term in UK contracts but it's completely unreasonable, and needs to change.
    It's not the vendor's problem if your lender decides not to lend.

    No one's saying it is!

    As others have said here, one way to get around this is to exchange and complete on the same day

    "on the same day"... but not at the same time.. what if the lender pulls out between exchange and completion.
    or reduce the risk by buying in cash.

    Most people aren't lucky enough have enough cash to buy a house, so it's not an option. Mortgages are the most common means of buying a house.

    This contractual duty for the buyer to take responsibility for the something completely out of their control is weighted towards the solicitor and sellers' favour, and makes no sense *unless* all parties are willing to take the *same* responsibility for their part in the transaction, e.g. Solicitor takes responsibility for their bank, seller takes responsibility for their bank. But do they? Didn't think so.

    Why should the buyer pay their entire life savings if the lender pulls out? Absolute rip off. I can understand *perhaps* at a stretch, to pay the sellers' fees they've lost, or for the months of interest lost on the capital gain for the delay caused which would be ((purchase price * savings account interest e.g. 0.03 )/12 *number of months property was off the market) , however, considering the fact that the buyer will have already lost a huge amount in survey fees, solicitors fees, etc. but most importantly, considering the fact the solicitors state "we are not responsible for the actions of our bank. If our bank fails to transfer funds between buyer and seller on time, this is not our responsibility, but the buyer's responsibility." it really makes no sense for the buyer to be wholly responsible for their bank as well.

    It seems entirely unfair, almost like bullying people if they don't agree to [completely unreasonable] terms, they can't buy a house anywhere in the UK...

    I'm surprised at this, because law usually trumps contractual law, so I'm surprised the gvmt. hasn't stepped in to prevent this sort of thing being written into contracts. !!!! happens, you don't automatically go and put all the blame on the buyer.

    Your defence that "the buyer signed, so he should follow through" doesn't hold up, I'm questioning why "the average Joe" who needs a mortgage has to sign such crazy contract terms in the first place, if he wants to buy a house.

    If the lender pulls out, everyone loses out, not just the seller; so why should they get the life savings off the buyer and destroy their chance of likely every managing to buy a house in their life. The seller still has their house and can sell to someone else! The buyer doesn't!! What a load of backwards cr*
  • franklee
    franklee Posts: 3,867 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    bobwilson wrote: »
    "on the same day"... but not at the same time.. what if the lender pulls out between exchange and completion.

    ...

    Why should the buyer pay their entire life savings if the lender pulls out? Absolute rip off. I can understand *perhaps* at a stretch, to pay the sellers' fees they've lost, or for the months of interest lost on the capital gain for the delay caused
    It's worse if you are in a chain as your buyer may pull out leaving you high and dry so you can't afford to make your purchase that you have also exchanged on and so the whole chain collapses. But there is only physically the one cash deposit so you don't get to keep that either you pass it up the chain ...

    Maybe you need to consider why the lender pulls out. If say the buyer, or the buyers buyer etc, has misrepresented their income making the lender pull the plug then why shouldn't the buyer have to pay up? The seller isn't party to the details of the buyers application so they cannot check it to asses the risks.

    If the lender pulls out or goes down the pan then the buyer can secure a mortgage elsewhere - provided the buyer has sufficient deposit and income. So long as they weren't borrowing to a max that others wouldn't match then there is unlikely to be a problem. It's unlikely the lender pulls out on completion day so the buyer will get some notice of the pulling out and have time to arrange a mortgage elsewhere. He also has at least the ten days notice to complete after the original completion day.

    But if you are worrying about the lender pulling out between exchange and completion when they are on the same day you would also worry as a cash buyer if the bank goes bust when the funds are with your solicitor, or as a seller if the bank goes bust after it arrives with your solicitor, or once it gets to your account before you have had time to split the funds. However that would need a major bank to go down which would be chaos anyway and you'd probably get shot during looting for food before worrying too much about any of that.

    Why not try asking your questions of your solicitor and let us know what they say. I guess most people just don't think about it that much. You could ask if you can buy any insurance against any of this but then if the insurance company goes bust ...
  • dippy
    dippy Posts: 290 Forumite
    Bob,

    IMHO, the lender and deposit issue is the wrong place to focus your efforts. By exchanging contracts, you are signing up to buying the property, irrespective of your personal situation, funds, lender, etc. There is simply a fine of £33K if you decide to break out of the contract.

    Now, you're worrying about it not being 100% under your control to fulfill that contract. Maybe you'd like to line up a second lender, do an Agreement in Principle, to minimise your risk (you'll have to look into credit checks, etc.)

    However, if the worst did happen and your lender pulled out between exchange and completion, your vendors and people in the chain would face the decision of waiting for you to find another lender or take your deposit as a fine and break the chain definitely. I'm guessing you won't have another £33K for a new deposit.

    The chain just wants you to have "skin in the game" before they all commit to this and start drawing down funds from their own lenders and commit to the chain of home buying/selling.
  • franklee
    franklee Posts: 3,867 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    What happens if the buyer gets made redundant between exchange and completion? Is the current lender bound to go ahead and lend the money? If not then I can see that securing a mortgage with another lender would be tricky. I suppose redundancy could hit just about anyone these days.
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