Move from hell, purchasers failed to complete HELP!

freezspirit

I learn something everyday and today its: http://www.in-deed.net/conveyancing/conveyancing-articles/gazumping-gazundering-gazanging


Never been in a chain nor has my parents so wondering when do you know when your in a chain and how big/small the chain is?

moneyistooshorttomention

freezspirit wrote: »

I learn something everyday and today its: http://www.in-deed.net/conveyancing/conveyancing-articles/gazumping-gazundering-gazanging


Never been in a chain nor has my parents so wondering when do you know when your in a chain and how big/small the chain is?

Which a very good point actually....

With my starter house, then I was an FTB to my vendor and they were buying another house...but I honestly couldn't tell you whether there was a chain above them or what....:o (though it was a private sale in that case, as in I'd decided to buy the house and then promptly got told it was for sale).

With my current one...that was bought through an EA in the conventional way. The EA told me it was a probate sale and it was clear the vendor already had their own property, though I guess it was more of an assumption of mine than anything else that "vendor having own property and its a probate sale" translated into "vendor wont be buying another place". That was, in fact, a correct assumption in the event. I've seen vendors place since and it looks nicer than this one and I've been told by their neighbours that they have been living there for some time and no sign of moving on...(yep...this is a small community....thankfully, considering "loada porkies and half-truths" I was told...).:cool:;)

franklee

I think the problem is that people may be in a chain buying and selling property for hundreds of thousands of pounds or more and yet have little to no hard cash or equity in their property. Therefore all this suing down the chain could easily leave the bulk of the bill being paid by the person who happens to have assets rather than the person originally at fault.

Buyers putting in a deposit to buy is supposed to mitigate this however often the only real cash put down is the first buyer and even then it may not be much as the first property can be significantly cheaper than the others. The rest of the deposits coming from equity in the various properties may mean someone else near the bottom of the chain has to sell their property in order to release equity to pay the debts that the buyers below them cannot meet regardless that one of the buyers below them was the reason the chain failed.

This seems particularly unfair as they are told nothing about the financial stability of the others in the chain so have no idea of the risks they are taking.

The FTB at the bottom is also at risk as if number two in the chain fails to complete the FTB will have lost their deposit as compensation for number three through no fault of their own.

The risk is greater the larger the gap between exchange and completion. That used to be a standard two weeks but is now all over the place.

In the past conveyancing was done by a local solicitor and mortgages by the local bank so things were thoroughly checked out and the whereabouts of everyone known. Now we have cheap online conveyancing bucket shops, a large number of lenders with quirky rules, short term employment and a mobile population it's going to be ever easier for something to be overlooked, a mortgage pulled late, a job lost between exchange and completion etc.

phoebe1989seb

freezspirit wrote: »

I learn something everyday and today its: http://www.in-deed.net/conveyancing/conveyancing-articles/gazumping-gazundering-gazanging


Never been in a chain nor has my parents so wondering when do you know when your in a chain and how big/small the chain is?

If buying/selling through an EA they will normally advise the situation.....ie, if selling and an offer is received they will tell you the position of person making said offer.

The house we sold in December we received three offers - one from a person in a fairly short chain (two other parties), one from a person with nothing to sell (cash buyer, living in rented as had previously owned overseas whilst working there) and finally one from a person selling to a FTB.......

Whilst selling to the cash buyer in this instance may have seemed like the obvious choice, we chose to go with the buyer selling to the FTB as they seemed the less *flaky* and we were proved right when they a) didn't attempt to renegotiate after the survey and b) didn't reduce their offer even after their buyer beat them down by £10k at the eleventh hour

The house we bought, the vendor had already purchased his new house and moved out. The EA told us this when conducting the viewing, although it was apparent from the fact the house was empty

Previously we have sold to cash buyers and purchased for cash ourselves (private sale where it was not the vendor's main residence), but have also sold to buyers that have had several parties in the chain behind them. Very fortunately we have never been in a situation where the chain has collapsed or someone has failed to complete

moneyistooshorttomention

Overall conclusion = is there a way to get some more legal protection into the process.

Until that time...who knows? Personally I worked on the basis with both houses of being as aware as I could of the vendors reason for selling (ie to have what certainty I could that they certainly would sell to me regardless).

With first house, it boiled down it being a 2 bedroom house and I could see that they had two opposite sex children not far off coming up to an age where they would HAVE to have a bedroom each courtesy of that fact AND he had a job move elsewhere.

With second house, knowing it was a probate one and I could see the greedy glint in the vendors eyes. The vendor was summed up by me the second I clapped eyes on them as, amongst other things, slavering at the mouth to get their hands on the inheritance money they had got tied-up in the house. I could almost see the £ signs glinting in their little eyes and them mentally spending the money asap.

mjoneseyjones

moneyistooshorttomention wrote: »

Overall conclusion = is there a way to get some more legal protection into the process.

Until that time...who knows? Personally I worked on the basis with both houses of being as aware as I could of the vendors reason for selling (ie to have what certainty I could that they certainly would sell to me regardless).

With first house, it boiled down it being a 2 bedroom house and I could see that they had two opposite sex children not far off coming up to an age where they would HAVE to have a bedroom each courtesy of that fact AND he had a job move elsewhere.

With second house, knowing it was a probate one and I could see the greedy glint in the vendors eyes. The vendor was summed up by me the second I clapped eyes on them as, amongst other things, slavering at the mouth to get their hands on the inheritance money they had got tied-up in the house. I could almost see the £ signs glinting in their little eyes and them mentally spending the money asap.

You talk some absolute rot.

Jhoney_2

franklee wrote: »

The FTB at the bottom is also at risk as if number two in the chain fails to complete the FTB will have lost their deposit as compensation for number three through no fault of their own.

I think they would receive their deposit + compensation like everyone else? Buyer two cannot just keep it. Buyer one would also have a claim for accommodation if vacating e.g a rented property, storage requirements..etc

.

Also worth remembering that the person at the bottom of the chain could also be a cash buyer or a property developer...or an anomaly like OP's buyer one. Thus, compensation may still be considerable.

RE: how long is the chain - you ask the EA/Vendor and get your solicitor to verify. Most FTB would not think to do that however and EA's say anything they like as it's up to the buyer to check everything independently (via solicitors) and not rely on it. Even their adverts and floor plans state something to that effect!

The system works well enough (albeit way too slow due to time to retrieve searches etc which is not the fault of the conveyancer), it's the people involved that can make or break it's successful execution.

franklee

Jhoney wrote: »

I think they would receive their deposit + compensation like everyone else? Buyer two cannot just keep it. Buyer one would also have a claim for accommodation if vacating e.g a rented property, storage requirements..etc

Where from? If buyer two owes compensation to both buyer three (and possibly buyer four via buyer three etc.) and buyer one and there isn't enough in the pot to pay both then who gets the money? Considering it's already in the hands of buyer three's solicitor I'd suggest buyer three has the greater claim. That leaves buyer one suing buyer two for their deposit cash back which may be a hiding to nowhere if buyer two is now broke. Bear in mind having a property to sell doesn't necessarily mean having much in the way of assets depending on other calls on the what little equity there may be. Presumably if buyer two had loads of dosh he wouldn't have defaulted in the first place. It's such a serious thing to do I'd suggest that it's people with large mortgages and little assets most likely to default should something unexpected happen to them while the sale is going through.

There seems to be an assumption that being able to sue someone up or down the chain means getting paid. However you only get paid if the person can afford to pay.

Jhoney_2

franklee wrote: »

Where from? If buyer two owes compensation to both buyer three (and possibly buyer four via buyer three etc.) and buyer one and there isn't enough in the pot to pay both then who gets the money? You seem to be taking the position that there is one cash deposit/pot that floats around between all parties, but there are in reality as many deposits as there are buyers in the chain e.g 9. I would say B2's deposit stays with B3 (that's why it's there obviously) and would need default costs on top. B1 deposit would be returned and would then have to sue I assume.

Considering it's? already in the hands of buyer three's solicitor? I'd suggest buyer three has the greater claim. That leaves buyer one suing buyer two for their deposit cash back No, because it's with the solicitor and therefore oblidged to be returned. which may be a hiding to nowhere if buyer two is now broke. Bear in mind having a property to sell doesn't necessarily mean having much in the way of assets depending on other calls on the what little equity there may be. Presumably if buyer two had loads of dosh he wouldn't have defaulted in the first place. It's such a serious thing to do I'd suggest that it's people with large mortgages and little assets most likely to default should something unexpected happen to them while the sale is going through.

The OPs post for example, tells me otherwise.

There seems to be an assumption that being able to sue someone up or down the chain means getting paid. However you only get paid if the person can afford to pay.

Yes, that's why charging orders (on property sale etc) are discussed above/put in place and why courts exist.As well as ccjs/defaults/BR etc for debts generally.

I was discussing the process, not the outcomes.

franklee

Jhoney wrote: »

You seem to be taking the position that there is one cash deposit/pot that floats around between all parties, but there are in reality as many deposits as there are buyers in the chain e.g 9. I would say B2's deposit stays with B3 (that's why it's there obviously) and would need default costs on top. B1 deposit would be returned and would then have to sue I assume.

My understanding is that there is one deposit passed up the chain, possibly the amount gets topped up along the way but the deposit passed up is commonplace. The same money can't remain with buyer 3 and be returned to buyer 1. If every link in the chain paid their own deposits separately in cash then I'd agree with you but usually they do not, they rely on the deposit being passed up the chain.

Jhoney wrote: »

Yes, that's why charging orders (on property sale etc) are discussed above/put in place and why courts exist.

A charging order would depend on there being enough equity in the property as the mortgage lender gets paid first. My point was if the amount after sale of the property isn't enough after the mortgage lender, tax man and professional fees have been paid. Simply having ownership of a property doesn't mean you can afford to pay all the costs, even after a sale, especially in the days when remortgaging to take money out or indeed house price falls can occur. Of course the person with a charge can wait many years until prices rise enough but that's not much comfort when being sued by someone up the chain in the present day.