House purchase going pear shaped, what are our legal recourses?

mrabody

My wife and I are in the process of purchasing a house. Briefly, the house is owned by a housing association but they had decided to dispose of it and intended to sell it at auction. I found it a couple of months ago and made inquiries of the housing association directly. They were agreeable to selling to us directly although they were insistent that we be in a position to exchange contracts ten days before auction or it would go to auction. We moved heaven and earth, got approval for our mortgage, scraped together the 10 percent deposit and were ready to exchange on the agreed date. Just one problem - they weren't. As the housing association is a charity they need permission from the charities commission to sell it. They got the permission to sell it at auction, but not to us. I suspect it was a case of their solicitors feeling lazy and not expecting us to be ready to exchange contracts at the appointed time.

Now, they advised us that since it was their screwup they would withdraw it from auction and that they would be in a position to exchange a few days later than originally anticipated. Except they were slow to withdraw from auction and continued to show the house. After I had chased them they confirmed that they were withdrawing from auction, which they subsequently did. However, someone who was interested in the house got all huffy with them and told them that they had been prepared to offer £30,000 more at auction than what we agreed to pay for it (personally I doubt they are prepared to pay that much since the house needs a considerable amount of work and for the cost of purchasing it and making it liveable inside they could buy a bigger, nicer, house on a bigger plot of land in the same area. I suspect they are just throwing figures around in hopes of killing our deal or getting it back to auction)

I have spoken to the chap at the housing association and he assures me that they intend to go through with the deal since we have incurred costs in getting the funding etc, and it was their mistake that has caused the delay and that they intend to exhange this Friday subject to receiving permission from the charities commission. However my solicitors seems to be getting a more mixed message from their solicitors, suggesting that things are up in the air because of the stink being raised by the other potential buyers and that it may be difficult to get permission from the charities commission to sell to us at the current price if there is another potential offer on the table.

I'm hopeful that it goes through. The chap at the Housing Association feels that since we have agreed to pay more than the Auction guide price, the Charity commission should give its assent to our sale. But his solicitors by the sounds of it are less sure (I suspect that this is because the failure to get permission for the sale is their fault and they are worried about potential negligence claims if the other buyers complain to the charity commission at a later date and as a result the Housing Association incurs some sort of penalty).

Anyways, assuming the worst and it goes pear shaped, do I have any legal recourse against the sellers. Obviously we don't yet have a contract, but we have relied upon their representations and have incurred costs by doing so. Obviously it isn't a great deal of money (probably only about £500) but it is still wasted if things don't turn out.

Alternatively we are prepared to go higher and outbid the other buyer, but of course that means we are potentially paying several thousand pounds extra because of this mistake by the seller's solicitors. I expect that once contracts are exchanged in such circumstances we would not be able have any legal recourse.

I'd be interested in any opinions as to what our options are.

Doozergirl

No options

No contract, no recourse. You hope that they exchange contracts with you or you up your offer accordingly

Sorry I can't give you any better news.

mrabody

I suspected as much. I recall from my contracts classes many moons ago (I'm a solicitor but new to the UK, and have always practiced tort and criminal law rather than contract.) that you can sue for misrepresentation or for relying representations by the other side which turn out to be false, but I suspected that with no contract that we couldn't.

On the other hand, with interest rates up and house sales potentially slowing (actually I think they are beginning to slow a little in our area, and the prices seem to be stabilizing) it's possible that if it falls through, then the housing association will have to relist it for auction which kicks it back a couple of months, then we could bid at auction and get it for about the same amount as what we have offered. However, it is frustrating especially since we have purchased insurance (as required by the mortgage company) as well as a used kitchen on eBay (the house needs fair amount of work).

Oh well, we'll just have to wait and see what transpires.