Day One Sale anyone????

lorrainec88

After receiving a mortgage offer and thinking we were almost there, we have just had the bombshell dropped that our seller doesnt own the property we are buying, and wants to do a "day one sale".
Anyone know anything about these or had experience? Basically we now have to apply to a lender who will accept this, which gives us a very limited selection and a higher interest rate :mad:. Hopping mad!

It is a refurbishment project by a builder. What might be the reasons that a seller would do this?
Very cross that this was not mentioned before by the Estate Agent, like months ago, as the first mortgage offer was pretty much worthless...
Grateful for any advice thank you !

Dave_Ham

I cannot believe this has not been mentioned before now, absolute disgrace.

As you are aware, there are only a limited number of lenders that will allow this so ensure you have a decent broker and solicitor to protect you.

I would be going bananas at the seller and Estate Agent and the first bit I would attack is the agreed sale price

lorrainec88

Hi Dave, I know - I feel like we have been made complete fools of.I had a great deal all lined up that I got direct, and everything was straight forward. Were told house would be ready end of July, then end of August, now end of September. Luckily we are not in a chain....
The builder who we are supposed to be buying from, who is refurbishing the house, doesn't own it yet, his brother does - who bought a piece of land with the house on it that we want to buy.

What would be the common reason for doing this - I assume somewhere along the line it is ££ related!

Dave_Ham

Not sure on the reason, but can you not just buy from his Brother?

Alternatively, work out how much extra a new mortgage would cost (including any valuation fees paid) and then tell them you want that off the agreed price.

They have moved the goalposts and not you and you should not lose out.

I would be prepared to lose the home rather than having everyone lie to me

lorrainec88

Dave_Ham wrote: »

Not sure on the reason, but can you not just buy from his Brother?

Alternatively, work out how much extra a new mortgage would cost (including any valuation fees paid) and then tell them you want that off the agreed price.

They have moved the goalposts and not you and you should not lose out.

I would be prepared to lose the home rather than having everyone lie to me

Thank you for your wise words Dave. If we cannot get them to drop the price to meet the additional costs, then we will have to drop out I feel. I am just waiting for a broker to come back to me with the total additional costs.

I assumed there had to be some financial benefit to do this which is why they would prefer we don't buy from the Brother.

Deep breath........

Senior_Paper_Monitor

This sounds like a contrived 'back to back sale' (presumably for tax purposes) which may cause even greater issues with the lenders - even those who don't insist on the 6 month ownership condition. Have the solicitor/broker verify the contract detail with the lender before spending any more money.

WellKnownSid

Senior_Paper_Monitor wrote: »

This sounds like a contrived 'back to back sale' (presumably for tax purposes)

I was wondering this - perhaps it's not the brother at all but the brother's newly-formed limited company... etc, etc... Worms, can of...

amnblog

this smells awful bad and you should think very carefully before proceeding.

Senior_Paper_Monitor

You might find this (I stumbled across it while checking something else on the Halifax intermediary site - and it is a particularly clear explanation) .....

Sub sales and back-to-back transactions


Sub-sales and back-to-back transactions are not acceptable.
A sub-sale occurs when a property is bought and then sold on within six months, i.e. the borrower is buying the property from someone who has themselves bought the property less than six months before. The date of registration at the Land Registry is how we determine the length of ownership.
This means that the current vendor must have owned the property for at least six months before we can accept an application to purchase that property, unless the property has been inherited.
A back-to-back transaction is a type of sub-sale where the intervening seller buys from the original seller and sells on to the borrower on the same day or within a few days. We also regard as sub-sales, cases where the seller acquires the freehold (or superior leasehold) title to the property, which they then immediately sell on to the borrower by the grant to them of a lease (or sub-lease).
The following cases are exceptions where it is acceptable for the property to be sold on within six months of acquisition by the seller.

Where sales are by:

• A personal representative of the registered proprietor; or
• An institutional mortgagee exercising its power of sale; or
• A receiver, trustee-in-bankruptcy or liquidator; or
• A developer or builder selling a property acquired under a part-exchange scheme.

Applications which involve assignable contracts or irrevocable powers of attorney in favour of intervening sellers are not acceptable. Any other structure to the transaction which has a similar effect should be reported to us.

kingstreet

Sub-sale and the conversion will probably see it classed as a newbuild, with the corresponding lower maximum loan to value.

lorrainec88

Thank you for all of the information...cannot get a lender to do what seller wants with back to back, so hoping we can buy from current owner..waiting to find out if acceptable to them....if not ho-hum, back to square one...