Previous owner appealing reposession after I've exchanged contracts!

FirstTimeBuyer99

Please help!
I exchanged contracts on my first home a few days ago. It was a repossessed property so I'm buying it from a bank. Our completion date is next week.
Yesterday my solicitor called and told me the registered owner has lodged an application at the County Court challenging the bank's entitlement to possession of the property. So the bank will be unable to complete on the agreed date.
The bank's solicitors say they believe the previous owner has no grounds for appeal and no chance of success, nevertheless the court has listed an application for a hearing in almost three months' time. I have no info about their case.
The bank's solicitors have asked my solicitor to confirm whether I will agree to either postpone completion pending the outcome of the hearing, or rescind the contract.
Does anyone have any advice please? I feel extremely stressed and intimidated. My own solicitor couldn't answer many of my questiins and didn't seem to have any experience of this happening before. The property is in London so my big worry is if I lose the property and start all over again, prices will have shot up even more and I won't be able to afford anywhere like the one I've just exchanged on. Also I feel I can't bear to go through this whole process again!
Any advice would be greatly appreciated.
Thank you.

Thrugelmir

Are you happy to wait 3 months? That's the decision you need to make.

ciderboy2009

Have they offered anything to postpone or rescind?

In my opinion (but bear in mind that I'm not legally trained) you are in a position of power as they have admitted that they cannot fulfill the contract - if it had been the other way around do you thing they would have just turned around and said "that's ok, don't worry about it"?

FirstTimeBuyer99

Hello, thank you for your responses. No, they have offered nothing to rescind or postpone. Also my solicitor said there was a third option- to take action against them for breaching the contract. But they basically said this could be very costly and were unencouraging. I asked the solicitor what they would do in my situation and they said they didn't know! I get the feeling they all want me to just say 'ok I'll wait 3 months' but if the previous owner wins their case, I'm 3 months further on with no property and property prices will have gone up even more.
I agree I am possibly in a position of power but I'm not convinced my solicitor knows how to advise me on how to use this to get the best outcome.

silvercar

The bank's solicitors have asked my solicitor to confirm whether I will agree to either postpone completion pending the outcome of the hearing, or rescind the contract.

Sounds like they are trying it on. I would answer, "no and no".

You should complete as normal.

For this to get anywhere:

1. If the previous owner gets to court (and that is a big "if" as they obviously are short of cash or wouldn't have been repossessed) they still have to win.

2. If they did win it would be for the bank to either pay them compensation or put them back in the situation they would have been had they not been repossessed. I think it highly unlikely the court will order the bank to do that, more likely they would award compensation.

3. If the court did order that the repossession be overturned, I reckon the bank would need to purchase the property back off you.

More than likely, especially as the bank must have some grounds for repo, the court wouldn't order the sale to be undone. Especially as you are the innocent party.

I should add I am not legally qualified, but I have only ever heard of repossessions being overturned within days of the repo - never months later.

ging84

i would have thought, unless you need to move right away a delay could mean your house is going up in value yet you're not making a single mortgage payment.

Something i would ask them to do at the very least would be to insurer the property from now until you move in and indemnify you against anything the current owners may do to damage or devalue the property.

FirstTimeBuyer99

Thank you all so much! This is all really helpful and a lot of info I hadn't considered.
What a palaver this has all been!
I should also add that one of the reasons I have little faith in my solicitor is that at 5.40pm the day before exchange, they called me and said they had just found out there was a service charge on the (freehold) property, but they didn't know how much it was, and that after completion I would be forced to pay any outstanding service charges that the previous owner owes. But they didn't know how much that might be.
Bearing in mind another party were trying to gazump me and I had been given the choice of exchanging the following day or getting gazumped, I had to exchange without finding this out. I ended up going round and knocking on a neighbour's door to find out what the charge was. I still don't know if there is an outstanding charge.
In addition, the day before exchange they also emailed to say they were still waiting for 3 documents from me. I called them to be told two of the documents had only been posted the previous day- including the contract. The other- informing me that I had to provide 2 forms of verified ID- was supposed to be posted in January and I still haven't recieved it....so I had to ask them to email everything to me, then took half a day off work to sort everything out in time. The exchange date is now passed and the documents still haven't arrived! Even though I had repeatedly asked if they were waiting for anything from me. This is the 'fast track' conveyancing service that cost hundreds of pounds more than normal conveyancing in order to meet the exchange date!!
The whole thing has been so incredibly stressful! If I'd had any idea I would never have started.
Thanks so much for your advice. As a first time buyer, buying alone, it is horrible not knowing whether the people involved can be trusted or relied on.

FirstTimeBuyer99

Also I should add the property is empty and has been for many months, so I can't think why the previous owner is only just appealing now, or how the vendor's solicitors didn't know anything about it.

Voyager2002

FirstTimeBuyer99 wrote: »

Thank you all so much! This is all really helpful and a lot of info I hadn't considered.
What a palaver this has all been!
I should also add that one of the reasons I have little faith in my solicitor is that at 5.40pm the day before exchange, they called me and said they had just found out there was a service charge on the (freehold) property, but they didn't know how much it was, and that after completion I would be forced to pay any outstanding service charges that the previous owner owes. But they didn't know how much that might be.
Bearing in mind another party were trying to gazump me and I had been given the choice of exchanging the following day or getting gazumped, I had to exchange without finding this out. I ended up going round and knocking on a neighbour's door to find out what the charge was. I still don't know if there is an outstanding charge.
In addition, the day before exchange they also emailed to say they were still waiting for 3 documents from me. I called them to be told two of the documents had only been posted the previous day- including the contract. The other- informing me that I had to provide 2 forms of verified ID- was supposed to be posted in January and I still haven't recieved it....so I had to ask them to email everything to me, then took half a day off work to sort everything out in time. The exchange date is now passed and the documents still haven't arrived! Even though I had repeatedly asked if they were waiting for anything from me. This is the 'fast track' conveyancing service that cost hundreds of pounds more than normal conveyancing in order to meet the exchange date!!
The whole thing has been so incredibly stressful! If I'd had any idea I would never have started.
Thanks so much for your advice. As a first time buyer, buying alone, it is horrible not knowing whether the people involved can be trusted or relied on.

I hope that you will "name and shame" the solicitor in question.

Tell the bank, your vendor, that you need to leave your present accommodation on the agreed date and that they are contractually obliged to hand over the property that you have agreed to buy. If that is not possible, you are willing to slum it in a penthouse suite at The Ritz for the three months -- at their expense, of course!

Thrugelmir

FirstTimeBuyer99 wrote: »

how the vendor's solicitors didn't know anything about it.

You quoted your own answer.

the registered owner has lodged an application at the County Court challenging the bank's entitlement to possession of the property

This will be the first they knew.

silvercar

FirstTimeBuyer99 wrote: »

Also I should add the property is empty and has been for many months, so I can't think why the previous owner is only just appealing now, or how the vendor's solicitors didn't know anything about it.

Even less likely that the court would order the repossession be revoked. Its not like there is a homeless family with three children living on the streets.

A second thought: What is the betting that the repossession was due to non payment of a mortgage? And what would the seller's grounds be - that they didn't know about the repossession? Why didn't they know? No doubt all correspondence by the lender was sent to the property address. The lender would do that because the seller hasn't given another address. Most likely reason that this is a residential mortgage and the seller isn't living in the property, so the seller will have breached the conditions of the mortgage. Reducing the chances of the repossession being overturned still further.