Our buyer exchanged without funds

Worried234

We were due to complete on both our house sale and purchase last Thursday, in a chain of four parties. On Wednesday afternoon, after all parties had loaded and dispatched their removal trucks, our purchaser's solicitor informed ours that his client's funds were not in place for completion.

It transpires that they hadn't ever had funds in place even at the point of exchange, and still hadn't secured funding at completion. His solicitor knew this, but failed to reveal it to ours.

Due the good will of those above us in the chain, we have been permitted to store our possessions in our new house, where they are locked up - the key remaining with selling agent. Others in the chain have done likewise.

Our purchaser is financing a renovation company who will spend months upgrading our old house, before reselling it at a substantial profit. As such he appears totally unconcerned at the chaos and stress he has inflicted on the rest of the chain.

We are all effectively homeless with barely a change of clothes. We are having to stay in a hotel, pay for meals out, buy additional clothes, take unpaid leave from work to replace the wasted paid days of leave specifically taken for the move. The toll on our health and well being through stress is appalling.

I know from our solicitor that he is bound under the contract to pay interest on the outstanding balance, but is our purchaser liable for the not inconsiderable costs being incurred by ourselves and others in the chain?

He seems totally oblivious and uncaring to the suffering he is causing all other parties.

Please advise.

BucksLady

I'm not a Lawyer OP, but have bought property. I wonder if it is your solicitor at fault because my understanding is that exchange of contracts can not take place until funds are in place. Similarly, completion obviously requires the funds to be available at the stated time.

dancingfairy

You should keep copies of absolutely everything. All receipts, notes of telephone calls, every little out of pocket expense. I think he will be responsible for everyone's out of pocket expenses too as they all get passed along the chain.
What a complete nightmare. What's your solicitor saying?
What assurances was he given that funds were in place? Someone's solicitor appears to have been negligent - whether that was yours for not doing the proper checks or whether that was the other solicitor for not doing proper checks I don't know. If you suspect your solicitor is at fault then you will probably need to engage another one to sort out the mess as your solicitor wouldn't be able to act for you.
df

Halle71

Once you have exchanged contracts, the agreed completion date is binding.

Your buyer has broken his contract with you and is potentially liable for significant compensation.

nidO

Worried234 wrote: »

We are all effectively homeless with barely a change of clothes. We are having to stay in a hotel

This bit needs explaining more. If your buyer doesn't have the money to buy your house, he hasn't bought your house and its still yours, so why aren't you still living in it?

As your buyer has failed to complete, any and all out of pocket expenses until he does can be billed to him, you will likely have to take him to court for this. This applies not just for you but for your entire chain, albeit with liability being passed down (as you've failed to complete your vendor can come after you for your costs but you can pass these straight on to your buyer, etc).

marlot

nidO wrote: »

This bit needs explaining more. If your buyer doesn't have the money to buy your house, he hasn't bought your house and its still yours, so why aren't you still living in it?

Yes, I'd have thought you would be required (in law) to 'mitigate your losses'. This can probably be best served by everyone moving back into their original houses.

Time to get your solicitor's advice.

Cornucopia

nidO wrote: »

This bit needs explaining more. If your buyer doesn't have the money to buy your house, he hasn't bought your house and its still yours, so why aren't you still living in it?

Indeed. Sounds like there is stuff the OP is not disclosing.

shireknight

Worried234 wrote: »

Our purchaser is financing a renovation company who will spend months upgrading our old house, before reselling it at a substantial profit. As such he appears totally unconcerned at the chaos and stress he has inflicted on the rest of the chain.

We are all effectively homeless with barely a change of clothes. We are having to stay in a hotel

Er your not letting someone do building work in your house before they have even paid for it are you? what if they rip half the house out then after a couple of weeks the workmen all walk out because this guy can't afford to pay them?

Jelly_Tots

Your buyers solicitor is breaking rules by not holding a deposit (at least) on exchange. And your solicitor is not acting in your best interests by not demanding s deposit held to order. (I work at a solicitors, if wee don't have deposit and confirmation of mortgage advance,or full purchase monies, we don't exchange contracts.)

Worried234

We have mitigated costs as far as possible. Even if there were any removals companies available within the next few weeks, returning our possessions to our original house and then moving them again when our buyer has the funds would be far more expensive than any hotel costs incurred.

Halle71

How many are in the chain and what timescale is your buyer talking about before completion?

It's hard to believe that someone who knows about property (a developer) would get themselves into this situation and then all parties in the chain would agree to move into hotels. I certainly wouldn't in that situation.....