Chain Collapse Post Exchange

AdrianC

OP - please keep us informed on how this unfolds. This has the potential to be a very useful thread for anybody unfortunate enough to find themselves in a similar position in the future.

Jon_B_2

I've got the popcorn ready - this could be a good one.

LittleMax

I think this is a case where no one here has the expertise (or enough information) to provide an answer, but lots of speculation. It is a (thankfully) rare question. I really feel for you and can only imagine the anxiety it must be causing. I too am following with interest, and hoping for the best possible outcome for you.

davidmcn

kinger101 wrote: »

FTB's solicitor is also acting for their lender. I doubt they'd exchange deliberately knowing the offer had expired, no matter what their client instructed them.

The solicitor might be reluctant to get involved with the potential hassle, but no reason why a buyer can't be sufficiently confident of obtaining funds in time for completion in order to exchange. The fact the solicitor will also be acting for the lender isn't relevant - the lender isn't a party to the contract.

eddddy

TBeckett100 wrote: »

I wonder if the top of the chain sells his house 10k below what he sold for originally whether he could claim that as well?

In theory - yes.

And the same would be true if others in the chain did the same.

So the FTB could end up with a bill for tens of thousands.

But if it's a naive, reckless FTB who's scraped together a 10% deposit, and whose circumstances mean they can't get a new mortgage offer...

... I doubt they would have the funds to cover it.

That puts the person at number 2 in the chain at severe risk, and perhaps number 3 as well.

DandelionPatrol

Angie_B wrote: »

If the FTB's mortgage expired before the planned completion date, then they/their solicitor should have refused that completion date and made it clear that they needed to complete prior to their offer expiring before they exchanged contracts.

Either the FTB is unable to now get a new mortgage (it's been almost 2 months since their original offer must have expired) or they never had a mortgage fully sorted in the first place. So it looks to me as though the solicitor has been negligent or the FTB has wilfully ignored legal advice.

You are right, and provided OP has been given the truth, there is no EITHER OR about it. FTB's solicitor let this happen:

Rutledge88 wrote: »

.... On the 4th of September, with everyone's belongings in their respective moving vehicles. we were informed by our solicitor that the solicitors at the bottom of the chain didn't have the funds in hand to complete. At that point they were not giving out any details, so we believed it was just an admin error, so sent our belongings into the removers storage facility, ready for them to move it in on the Monday. We then found out that the first time buyer at the bottom of the chains mortgage had expired, and they would need to get it renewed.

Now if FTB's solicitor let this happen, it does open the route of claiming against and suing FTB, because FTB should have a claim against his solicitor for professional negligence.

However, FTB needs to be briefed that it is nothing personal and to find an appropriate solicitor. Because, being wet behind the ears, the FTB is likely to freeze in the headlights of the oncoming legal action and turn to his negligent solicitor, who will be the last person to provide the FTB with any help in making a claim which will ultimately be footed by their Professional Indemnity Insurance.

Andrew_Ryan_89

Im currently in the process of buying a property.Once the contacts has been signed and, especially, exchanged, shouldn't all monies (deposit and mortgage) be in the accounts of the solicitors?

Thought this is how everyone pretty much guarantees that the chain won't collapse at this stage. Just bemused that it can get to this stage and then be told the mortgage has expired.

kinger101

Andrew_Ryan_89 wrote: »

Im currently in the process of buying a property.Once the contacts has been signed and, especially, exchanged, shouldn't all monies (deposit and mortgage) be in the accounts of the solicitors?

Thought this is how everyone pretty much guarantees that the chain won't collapse at this stage. Just bemused that it can get to this stage and then be told the mortgage has expired.

No. Only the deposit is transferred at exchange. The solicitor would not request the mortgage at this point, as interest is incurred from the moment it is received. The money from the mortgage would be drawn on the day of completion (or perhaps the working day before).

So the chain could still collapse (as it has here) or in the event something happens between exchange and completion such as the purchaser having something nasty showing up in a bankruptcy search that occurs just before completion.

Exchange doesn't guarantee completion. It just the point where the contract is formed, meaning there will be financial consequences if the sale does not complete.

pc1271

It sounds like some common sense is required. The best outcome is probably that all parties agree to no further action and just suck it up - if all that will be achieved is a series of bankruptcies, more legal bills and ruined lives, no one benefits.

Rutledge88

Thanks everyone for their input. I will keep this updated with any progress. I really hope some common sense is excercised, but where it all sits with the solicitors, I think it will just go black and white, contractual. Just what you need when due your first child...