House sale falling through after exchange of contracts

iammumtoone

So it seems the buyers mortgage application was turned down and nobody noticed :eek:

The application would have been accepted if the bathroom and kitchen were updated (which the seller admits needs doing), giving the buyer the opportunity to ask the seller to update these at their cost to secure a sale - unlike to happen, but the option was there if the seller agreed.

I am assuming to get a BTL mortgage the state of the property needs to be a lot better than a standard residential mortgage. The survey on my house was full of comments that all the rooms needed updated, but they were functional so I got a mortgage. No one would have got a BTL mortgage on it as no one would ever rent the house out in the state it was. I am not saying the OPs flat is that bad but it needs to be perfect for the lender to ensure their client can get in tenants straight away to be able to afford the re-payments.

None of this is the OP fault, I really feel for them.

EDIT: I missed read it, the mortgage application was accepted but retained? but isn't that the same as above if the buyer doesn't have the cash for the updates and the seller is unwilling to help?

marksoton

betmunch wrote: »

Well this is an interesting thread.

I don't understand why everyone is surprised about a lender putting 100% retention on the loan.

They don't care how the work is done, who owns it at the time, or anything. They are keeping their money until the property meets their requirements for security.

Also the first post said the buyer needed to prove they had funds to do the work, not to actually do it. Can the OP clarify that please?

Stop trying to be logical about how they can expect this or that, its a mortgage lender we're talking about, they have their own special logic.

This should have been addressed ages ago by the buyer, they have been let down by both their solicitor and mortgage broker.

I'll be keeping up with this thread with interest

Whilst i agree in the main i find it somewhat implausible that both a broker and conveyancer missed this retention.

Especially on a BTL where ( and feel free to correct me) the lender has more caveats and requirements.

AnotherJoe

iammumtoone wrote: »

EDIT: I misread it, the mortgage application was accepted but retained? but isn't that the same as above if the buyer doesn't have the cash for the updates and the seller is unwilling to help?

It is but thats after the event, the mortgage co made the offer, thats a matter for the buyer to accept or not. The buyer may have been OK to finance the sale and pay to renovate and then mortgage so they can claim interest rate relief and that's probably what the mortgage co assumed was happening when this hapless buyer went ahead.

Daletoon7

I can assure you that both the buyer, their financial advisor and the buyers solicitor did not see the retention otherwise they should not have exchanged and my solicitor would have advised me not to exchange.

I do believe my buyer has some funds to "modernise" the flat. I've now seen the buyers survey which clearly states the value they offered was correct but would be worth 10k more with the recommended new bathroom and kitchen.

Clearly my buyer and her legal team should not have exchanged with no mortgage to call on. They now have to get a resurveyed or a new mortgage offer very quick as the whole chain has exchanged

betmunch

marksoton wrote: »

Whilst i agree in the main i find it somewhat implausible that both a broker and conveyancer missed this retention.

Especially on a BTL where ( and feel free to correct me) the lender has more caveats and requirements.

And yet, that seems to be what's happened.

Think of all the transactions that happen in a year and how often this is posted about in that same year? Once or twice a year out of 10,000s transactions.

I'm not surprised at all, we all know it happens very rarely so its going to be highly implausible when it does actually happen

marksoton

betmunch wrote: »

And yet, that seems to be what's happened.

Think of all the transactions that happen in a year and how often this is posted about in that same year? Once or twice a year out of 10,000s transactions.

I'm not surprised at all, we all know it happens very rarely so its going to be highly implausible when it does actually happen

Fair comment i suppose.

I guess whatever the outcome someones got a large bill coming their way ...

csgohan4

Someone's going to lose their job over this.


I bet the buyer's Solicitor is from the EA

Daletoon7

My question is how can I be sued? I've done nothing wrong! I've exchanged in a chain using legal professionals and it's my buyer and their legal team that have missed the retention. Shocking

csgohan4

Daletoon7 wrote: »

My question is how can I be sued? I've done nothing wrong! I've exchanged in a chain using legal professionals and it's my buyer and their legal team that have missed the retention. Shocking

you can't complete on your sale as you can't sell your house as your buyer can't complete and so forth up/down the chain

dancingfairy

Right, you are legally committed to buying a house as you have exchanged. You now can't complete ( I'm assuming). The people you are buying from can't sue anyone else, they sue you. You then sue the person who is meant to be buying from you. You sue them for all your costs and expenses ( including the costs you are being sued for).
The person breaking the chain below you is in a pickle. If they don't complete it's going to cost them big time.
All you can really do at this point is serve a notice to complete on your buyer and wait. Oh and keep copies of all expenses you are incurring.
Wait and hold tight
Df