Buying a house, 2 months in, seller trying to get me to exchange on open contract

lotsofjam

Summed up: first time buyer, I am buying a house, the seller (the builder, I am buying a house that the current occupants have sold to the developer, who are building a house for them) have already accepted my offer. I put a £250 reservation on the property and I am at the point where we are ready to exchange. The house will (should) be completed in May.

I got a phone call last friday from my solicitor telling me the builders want me to exchange on an open ended contract as in, they will not put a completion date on there. It has been explained to me by my solicitor that if my mortgage offer expires (august) and we have still not exchanged and I am unable to get an extension on the offer I would be in breach of contract if they then try and complete which could mean I lose my deposit.

I have obviously told them that this is insane, and there is no way I will risk that if the house is badly delayed for some reason.

We have tried negotiating with them, we came up with two ways to resolve this.

1) We don’t exchange until the house can be completed, that way there is no risk. If my offer expires, i'll get another.
2) I exchange, but the seller must agree that if we get to the expiry date and we have still not exchanged, I MUST be able to pull out of the deal without ANY financial cost to myself.

They refused both of these things.

I have spoken with a few people who work in the field, solicitors and mortgage advisers and they all agree that this is extremely unreasonable. The sellers have threatened to put the house back on the market. I have made it clear to them that I will NOT change my stance on this. I am not risking the deposit I spent 2 years saving. The solicitor was surprised that their own solicitors would even agree to try this.

So where we are now is that I have told them I am going to do nothing. If they want to walk away and find another buyer, go ahead but I am still here waiting to exchange and if they do not find a buyer, or they change their minds when we can make a completion date I will be here waiting.

Does anyone have any advice for me? Is there some sort or regulator I can speak to about this?

kinger101

The only advice I can give you is to stand firm and threaten to walk away if they insist. You'll lose money, but it would be foolish to exchange on a house that hasn't even been finished yet.

Derboy

So you're buying a property that someone has part-exchanged to a new-build developer?

No regulator for you to talk to about this. You either accept their terms or don't. You're not being forced to. If you really are prepared to walk away then stick to your guns. Builder is trying to cover themselves for delay on the new build. I'd do EXACTLY what you've done.

AnotherJoe

I think your actions are absolutely correct. Given May is not that far off it all seems very strange as well. Could it be they think they can sell the house for more now? or are they desperate to get your 10% deposit to finish off the house?
If the situation is simply that they are being wholly unreasonable they are unlikely to find new buyers who agree to this so they won't be any better off. And by the time they find someone who has a mortgage arranged etc they'd be in a position to exchange with you? This stinks IMO, so stick to your guns.

pinkshoes

DO NOT exchange without a fixed completion date. This would leave you in a very vulnerable position if your mortgage offer expires.

If they can't fix a completion date, then they can't be sure of when the build will be complete.

Pull out and get your deposit back, as this is an unfair T&C.

eddddy

As you correctly describe, most developers would include a "long stop" completion date in the contract. i.e. If they don't complete by that date, you have the option of extending or cancelling.

And you would ensure that the long stop date is before your mortgage expires.

Without a long stop completion date, a "dodgy" developer could keep you hanging on and tied-in for years. (I know somebody that bought "off plan", and is in exactly that situation.)

AdrianC

You're really just doing the same as the people who have PXd the house are doing. They've exchanged, with no definite completion date - because the builder don't know when the new-build will be ready. As soon as it is, they'll complete and move, and so can you.

AnotherJoe

AdrianC wrote: »

You're really just doing the same as the people who have PXd the house are doing. They've exchanged, with no definite completion date - because the builder don't know when the new-build will be ready. As soon as it is, they'll complete and move, and so can you.

You have no idea if "its the same". For the OP, it means putting 10% of the house price at risk, money they could entirely lose. What happens if it drags on, OP's mortgage offer expires and OP cant get a new mortgage? OP is legally obliged to purchase and on the hook for the deposit money which would be forfeit, as they point out.

For all we know his sellers dont require a mortgage. And even if they do, just because they've done something inadvisable doesn't mean the OP should :eek:

Your advice is akin to saying "dont worry your sellers are jumping off a cliff so you should as well".

lotsofjam

Don't worry Joe, I am not going to exchange. I am going to see what happens. If the builders deicide to move on, so will I. I liked that house a lot too...

knightstyle

These open contract exchanges are a recipe for trouble, they delay and delay completion, your mortgage offer runs out, you are made redundant and then cannot get a new mortgage. This is the worst case but it can and does happen.

AndyBSG

Of course, the other worry to consider is that they find another buyer and you lose the house anyway.

Until you exchange there is always that risk and it may even be the case they already have someone who is willing to pay more and this 'tactic' is just a way to get you to pull out of the sale.

Personally, i'd stay as you are with the offer still on the table but i'd also be looking for an alternative property... Think how satisfying it will be to line up another property and the day before your current vendors are actually ready to exchange you turn round and walk away