Part Exchange Conveyancing nightmare

Ruby_and_Max

Drama on the day of exchange – any advice appreciated from people’s prior experience or expert knowledge as two solicitors arguing with each other and I don’t know who is right.

I am trying to buy House A. Let’s say price 300, mortgage required 200.
I am selling House B. Let’s say price 200, current mortgage outstanding 100.

The interesting aspect to the transaction is that the sellers of house A are buying house B as a buy to let. They have no mortgage on house A.

The problem is that my solicitors as saying for the transaction to proceed, the sellers of house A need to pay the 200 for House B up front. The mortgage of 100 is then redeemed and then the new mortgage of 200 is added to the remaining equity of 100 so I can buy house A.

My seller’s solicitors say this is poppycock and the 200 for house B is notional, the new mortgage of 200 pays off the old mortgage of 100 and the resulting 100 is added to the notional 200 so the new purchase can take place.

We are currently in a stand-off and I don’t know who is right. I can see from a cashflow point of view my solicitor’s position.

Equally it doesn’t seem quite right that my seller has to stump up 200 out of nowhere in order to receive 300 back about an hour later.

Who is telling the truth?

I can see if it is my solicitors, then the transaction could possibly be rescued by a bridging loan – if this is the case I guess it is the only option, but it does sound like a sledge hammer to crack a walnut.

Any urgent help appreciated!

ging84

you are selling your house to the person you are also buying a house from?

Ruby_and_Max

Yes,that's right.

ihatemyhouse

as sure the mortgage company, would want there money in full, with the solicitor, before they say ok, so both full asking prices In cash would have to be moved between solicitors, then full amount past on to solicitor, who then pass it on to mortgage company, then what is left on to client,

I think your solicitor is right, as it sounds dodgy to me

ging84

i would tell them to just get on with it, it's what you pay them for, what is the point in you worrying about it or trying to sort it out unless you happen to be a better solicitor than both of them put together

Richard_Webster

I cannot see why OP's solicitor should be right - unless a mortgage lender has some funny views on the matter.

There is no difference in principle between this and an ordinary chain where you complete your sale and purchase on the same day and use your buyer's money to pay off your existing mortgage and your new mortgage to go towards your new purchase.

Even if you are staying with the same lender it is quite normal for the solicitors to have the mortgage advance money on the purchase a day or so before completion and to send the money to the mortgage lender to pay off the old mortgage on the day of completion.

I think your solicitors need to explain further why they think it is necessary.

silvercar

We had a chain where A bought B, B bought C, C bought A and D. The money moved on the differences alone. I think your solicitor is wrong.

ValHaller

Your solicitor is being daft. As mentioned, it should be done on differences. All the transfer of funds required is 100 from your new lender to your solicitor to your seller's solicitor.

Your solicitor should be working with the seller's solicitor to write an addendum to the 2 contracts to establish that the 2 contracts are linked and that both contracts are fulfilled by exchange of B at 200 plus 100 cash for A at 300.

Solicitors are there to resolve problems, not cause them.

Ruby_and_Max

Thanks, my conveyancers have now confirmed back to me they were being planks and we should exchange today. Very worrying though!