New build contract/completion advice

afcajax73

Hi everyone,


I was hoping I may be able to get a little advice here..


Myself and my partner reserved a house "off plan" back in August '15, we are first time buyers and currently live in rented accommodation. We paid a reservation fee and got all the necessaries moving in preparation for completion. We were at this stage told that the house would be completed December '15, but due to the busy period we wouldn't complete until January '16.


Fast forward to October '15, we were denied by two mortgage lenders on the basis of the mining report. We were informed that the property was within 20m of an open, untreated mine shaft. This came as a huge surprise as the two neighbouring properties' search had come back clear. No progress was made for several weeks and eventually we got another independent report completed which showed no presence of mines in the area. After further investigation it turned out that our developer had provided an incorrect grid reference for the search and as a result we had been turned down for two mortgages, and a delay in this apparently pushed us back to the second week of February '16.


We were really upset by all of this, but really wanted the house and so carried on and progressed all the paper work to get to the contract exchange stage. When exchanging contracts we were told that the build completion date would now be 31/03/16 (due to unforeseen circumstances) and they wanted to include a long stop date of 29/04/16. Again, we were not happy, but its a date, so we progressed.


We were all set (as far as we knew) for 31/03/16, but two weeks from move in we were told by the builder that they will now be working to the long stop date of 29/04/16. Again, we were upset, but continued on. If we now fast forward to present day (bearing in mind our long stop date is tomorrow) the builder has told us last week that they will not now meet the long stop date and we are looking to complete circa 31/05/16.


We are now at the point where enough is enough. We have been paying out extra rent to what we expected (although we did budget for this), which we now see as "dead" money which could be paying off our mortgage. Also, our mortgage offer expires on 07/06/16 which makes me very nervous as all the previous delays leaves me with no confidence in any sort of completion date provided, especially when this one isn't even in writing.


I suppose what I'm after here is a little advice on what my rights are in this situation, or what I could reasonably expect to be the outcome if I kick and scream for compensation with the builder.


Thanks in advance!

davidmcn

afcajax73 wrote: »

I suppose what I'm after here is a little advice on what my rights are in this situation, or what I could reasonably expect to be the outcome if I kick and scream for compensation with the builder.

Your rights are stated in your contract (which presumably extend to your ability to walk away).

You might be able to get something out of the builder in return for allowing them some more time to build. Or (if prices have gone up) they might be quite happy to be able to sell to someone else instead.

Cakeguts

A couple of months extra rent is not going to pay much off the mortgage. You would just be paying the interest on the mortgage so you probably wouldn't own any more of a property in that short time. So the extra rent may be annoying but it won't really make a lot of difference except to 2 months of interest. New builds always have variable completion dates sometimes caused by the weather.

If you want this particular property you are going to have to wait until it is available for you to buy. The builder is not going to compensate you. They can just sell the property to someone who is happy to wait for it.

mrschaucer

If you have exchanged then the completion date is set in stone in the contract signed by both parties. The long stop date is the one now applicable, as long as the builder has followed the clauses relating to this in the contract so far. You do need to read the contract carefully (or your solicitor does) to see if there are any further get-out clauses for your builder if he fails on the long stop date. Doubtful, or surely your solicitor would have pointed this out?
If they fail to complete with you on this second allowable date, then your solicitor will issue a Notice to Complete giving them 10 working days to do so. The penalties thereafter are massive for the builder - your solicitor will advise you on what you are able to claim. But DO read that contract carefully so you know what has been signed up to.

AdrianC

If they were originally working to Dec 2015 completion, how come they're now unable to complete until the end of May 2016? That's a lot of delay.

Have you spoken to the lender, to see if they are willing to extend that expiry date?

In the meantime, don't view your rent as "dead money" - it isn't. It's providing you with somewhere to live.

dgtazzman

Talk to your builder, talk to your solicitor. Threaten to pull out, especially if you know buyers aren't lined up for the property, you might get something for your patience.

I am in a similar situation.

Original completion was set for end of November/beginning of December 2015, now they MIGHT complete the second week of June, but could well run to the end of June/July.

In the end I got fed up and instructed my solicitor to start proceedings to pull out as the long stop date had long passed. A day later I got a very apologetic email from the builder's CEO, offering me some incentives to change my mind. In all for my patience I am getting:

* Upgraded tiling to kitchen and bathrooms
* My choice of white goods/oven/hob
* Upgrade to front door (though this is because they had an upgraded door left from a sale that fell through, but I claimed it for me).
* ALL my legal fees paid, seeing as I am now on mortgage application number 3, I'm sure I've racked up quite a bit with my solicitor.
* Stamp duty paid
* 3k off asking price (though this was already negotiated before they broke the long stop date).

All in all, I'm getting a house that had an original asking price of 200k for 189k with 8-10k worth of extra incentives for not pulling out. Helps that the house is in Wales, so the property market isn't crazy, it's still a buyer's market around here.

davidmcn

mrschaucer wrote: »

If you have exchanged then the completion date is set in stone in the contract signed by both parties.

Not if the property is still being built. The completion date will be determined by whatever date construction is finished.

The long stop date is the one now applicable, as long as the builder has followed the clauses relating to this in the contract so far. You do need to read the contract carefully (or your solicitor does) to see if there are any further get-out clauses for your builder if he fails on the long stop date. Doubtful, or surely your solicitor would have pointed this out?
If they fail to complete with you on this second allowable date, then your solicitor will issue a Notice to Complete giving them 10 working days to do so. The penalties thereafter are massive for the builder

I think you're misinformed here - the builders are unlikely to have accepted any penalties for being slow to build. The longstop date is the date at which the buyer is entitled to walk away, without either party paying a penalty.

afcajax73

Hey everyone, thanks for all your replies.


It looks like it's a mixture of all of the answers so far. It has been confirmed that we are entitled to walk away with 100% refund from the builder on all aspects of what we have paid so far.
This includes any searches, fees, optional extras paid for and also deposit.


We ideally don't want to walk away, and the builder has already stated they don't want us to walk away. We have had a large amount of extras which we have paid 50% for (with the remaining 50% payable on completion) which if we walk away they will have to refund, but have already been installed.


We are currently in negotiation for some sort of mutual "compensation" which will keep us and them happy. I will keep you updated as things progress.

Derboy

Im in the same situation regarding the delays. We sold our property in September and moved into a rental. The original date of entry was Jan but the longstop on the contract was end of March. Ours has been delayed 4 times.

After the first delay I called the regional sales manager and explained our situation and asked if they'd give me some goodwill. Out of that friendly conversation I got turf and full height tiling in all bathrooms.

The next delay took us past the long stop date. Another reasonable conversation ensued where I explained that as we were free to walk with a full refund we were considering this. They escalated to the MD who came back and asked what our out of pocket expenses were as a result of the delays. The key for me was to be fair and reasonable so I asked them to cover the rent that I had paid from the original completion estimate until our actual move in date and they agreed. This resulted in around 2% being knocked off the house price at settlement.

The key to it is to talk about real costs to you rather than to make up for stress or emotion.

afcajax73

Derboy wrote: »

Im in the same situation regarding the delays. We sold our property in September and moved into a rental. The original date of entry was Jan but the longstop on the contract was end of March. Ours has been delayed 4 times.

After the first delay I called the regional sales manager and explained our situation and asked if they'd give me some goodwill. Out of that friendly conversation I got turf and full height tiling in all bathrooms.

The next delay took us past the long stop date. Another reasonable conversation ensued where I explained that as we were free to walk with a full refund we were considering this. They escalated to the MD who came back and asked what our out of pocket expenses were as a result of the delays. The key for me was to be fair and reasonable so I asked them to cover the rent that I had paid from the original completion estimate until our actual move in date and they agreed. This resulted in around 2% being knocked off the house price at settlement.

The key to it is to talk about real costs to you rather than to make up for stress or emotion.

That's great advice, thanks for the reply. Do you by any chance know how to obtain the contact details for a regional sales manager? So far, without the help of solicitors I can't get past the local sales team.