Being rushed into exchange and in need of advice

TBagpuss

Edddy is correct.

The biggest risk is that you are unable to complete, due to the delay, and are then in breach of contract. This could happen if your mortgage offer expires, or if your circumstances change so that your mortgage offer is withdrawn.

other things to consider:
- Are there alternatives - could your sellers complete with you now, and then rent for the next 5 months before they move into their new build
- how attached are you to this specific house? While you have, I assume, already paid for surveys etc you might want to consider whether it is worth looking elsewhere for something without these hassles
- Insurance. it is usual for you as buyers to be responsible for buildings insurance from the date of exchange. When there is only a week or so between exchange and completion, that isn't a big deal. If you are looking at 5 months, it becomes more expensive, also you would need to check the terms of the policy.
- deposit - the deposit payable on exchange is whatever is agreed between you and the seller. although 10% is common, it is not a legal requirement. It is not uncommon for it to be as low as 5%.

I agree with PPs that it is unwise to use the solicitor recommended by the estate agents without checking them out first.

I personally would not agree to 5 months between exchange and completion as I would find it simply too stressful. Whether or not you are willing to do so it ultimately up to you - people do, particularly when a new build is involved, but that does not mean that *you* have to, if you are not comfortable with it.

I persoanlly, in your posiotion, would be looking for other properties and telling the seller that I am happy to go ahead if they can exchange and complete promptly (if that means they rent or stay with family, that is their issue) After all, that is what they are asking you to do, with the added risk of having your mortgage offer run out or be withdrawn and leaving you in the lurch.

Of course, it all depends whether you are willing to take the risk that they then withdraw, or whether they try to work out a compromise with you.

shimano

I never ever go with an EA's recommendation of a solicitor or broker. Always appoint your own independent specialists. On my purchase now they tried to force me to use their solicitors (apparently the seller would withdraw if I didn't), but told them to p off.

You almost need to, like you have insinuated, forget about the upward chain for one moment and focus solely on your transaction. As stated you would be taking all the risk with such a long gap to completion.

I'd personally go use my own independent solicitor if I was in your situ (most of the searches should be able to be re-used anyway), rather than one part of a company that owns a large % of the UK's estate agents.

Grobbelrevell

stator wrote: »

No way I would exchange 5 months before completion, especially since they might move the date again.

Well this would be written into the contract as I understand it, and fixed as mid-September - which would be within the mortgage offer validity period. Of course, this doesn't factor in potential changes in circumstance, however unlikely, because the lender may well request updated financials from us due to the delay.

eddddy wrote: »

Is the completion date fixed in the contract? Or does the contract allow it to be moved (beyond the six month mortgage offer expiry)?

We've been told that the completion date will be fixed within the contract. As far as extension periods on the mortgage offer is concerned, the advisor for them simply told us that it's considered on a case by case basis.He didn't offer any more clarity than that, up to now.

eddddy wrote: »

As you may now be realising, perhaps it was a mistake to use solicitors recommended by the EA. They tend to offer a budget service, at a premium price. And they may be more keen to keep the EA happy, than they are to keep you happy (because they want the EA's repeat business). And the EA gets a big chunk of your legal fee as commission - so the EA's advice to use that solicitor isn't impartial.

Absolutely! If there was one thing in all of this we would change in an instant it would be our choice of solicitor. Rather than simplifying the process - as was our hope - it's created more issues, confusion and stress. Again, if we weren't being driven towards an exchange at this point in time, and with very little understanding or flexibility from Redrow then we'd most likely change solicitor now. Given the timeframes at play though, I don't think we have the room to do that.

loubel

It doesn't sound like your conveyancer has properly explained the transaction to you, as nothing you have mentioned is unusual when a new build is involved in the chain. You need to contact your conveyancer and let them know that you didn't/don't understand the implications of having a new build in the chain and ask them to clearly explain these to you so that you can decide whether/ how you wish to proceed.

Grobbelrevell

Doozergirl wrote: »

It all sounds quite normal when a new build is involved...

I've had mixed messages with this. On the one hand our mortgage advisor is telling is it's a "very unusual" situation, whereas yourself and others are saying it sounds standard. If it is and it's more a case of us not fully understanding the intricacies of the process, then fine, we just need to be absolutely clear on that. Of what is required of us at each point in the process, what the risks at each point are, what safeguards we can put in place to protect against those risks etc etc. Fundamentally we're just not clear on these points and for that reason, mainly, we're not comfortable with where we're being directed at the moment.

I would be happier if the exchange were far closer to the completion date. That goes without saying. Less risk for us in general. If that isn't possible then at the very least I want to be certain that any funds we put down at this point are protected.

jbainbridge

loubel wrote: »

It doesn't sound like your conveyancer has properly explained the transaction to you, as nothing you have mentioned is unusual when a new build is involved in the chain. You need to contact your conveyancer and let them know that you didn't/don't understand the implications of having a new build in the chain and ask them to clearly explain these to you so that you can decide whether/ how you wish to proceed.

The 'rush' to exchange is normal when buying a new build.

You however are not buying a new build. Before you exchange you -
- should have completed your survey and any other investigations
- will have completed searches
- are happy to wait until the new build is complete and that your mortgage offer will still be valid

A 10% deposit is normal at exchange and is always passed up the chain - I wouldn't worry about that.

Your solicitor should be explaining all this to you ... you are paying them to protect 'your' interests.

borkid

When we bought off plan 3 years ago the builders only wanted £1000 deposit on exchange. They also lent us a house until our new one was built. We paid at different stages of the build and then a final balance on completion of the house.

I would certainly have not been happy with your situation, in fact our solicitor advised us against exchange because the builders wanted the deposit to be paid to them. For £1000 we were prepared to take the risk especially as they were lending us a house to live in.

EmmyLou30

Don't do as they ask. That new build could over run. My brother's is currently overruning by almost 2 years and he exchanged contracts early last year! He's had to get repeated mortgage offers as they only last 6 months and none will extend beyond that no matter what your circumstances so don't go banking on that. In his case it's fine as although exchange has happened there's no actual house to insure yet, same for your vendor. You on the other hand would be insuring a lived in house for months and not many policies would cover you for that scenario as it's not normal beyond a week or two.
The deposit is held by the solicitor and my brother's solicitor has had his 10% for almost a year now. He would only lose it, as would you, if you fail to purchase the property.
To me it's just too risky and I'd either tell them no, or walk away. She can go ahead and put her deposit down and exchange contracts on the new build, but she doesn't have to do the same with her house to you. The only reason she's wanting to do that is because if you pulled out, she wouldn't have the money to complete on her new build so she wants to tie you in now. That's not fair and she's being unreasonable. I think she should move out and rent as she'd easily get a 6 month tenancy and use all 6 months of it while waiting for her new build.

JencParker

Grobbelrevell wrote: »

One possible alternative solution that we've been considering floating is to move our own completion date to next month, 3-4 weeks after exchange, as would typically be the norm, as I understand it. That would mean far less risk on our part, and no real financial loss as well. From there we would come to a seperate arrangement with the current vendor for rent on the property, for her to remain there until such time as the new build is completed. That way our sale is completed, and all monies passed through to her. From then on, her transaction with Redrow Homes would be entirely independant from us, and to our minds at least, far less complicated. Again, any advice as to whether this is a viable option would be welcomed.

Apologies for the lengthy post, but hopefully i've explained the situation well enough there.

I really wouldn't go down that route. You become a landlord and will need to go through all the legalities of contract that being a landlord entails. Minimum 6month contract, gas/elect certificates etc. not to mention that you would have to get permission from your bank as you will be getting a homebuyer mortgage not a buy to let mortgage. You may well find they reject it anyway as they would require you to buy a property with vacant possession which you would not be if you let the current owners remain there renting.

Pete9501

Agree to exchange and complete next month and your vendor gets out of the house by renting somewhere else for 6 months. The house is yours and you don't carry any of the risk. Leave the vendor and the builder to each other, afterall you don't benefit from the new house or px deal so don't take any of the risks.