Strange situation just before completion- Need advice!

ishi

I am in a very strange situation & urgently need advice from experts here:

I have signed the contract on 31.08.2016 & agreed on completion date on 12.09.2016.
Yesterday I came to know that current owner has outstanding mortgage on the house which I am buying & he is not paying mortgage payment since quite a while.
My solicitor told me that house would have been repossessed soon if it was not sold. solicitor also said we can't complete until we get some closing statement from current lender.

In sellers information form,owner mentioned that he does not have building insurance, so I was assuming that he own the property outright.

All these surprising information coming to me just 3days before completion date!

The owner now lives in US, so it's getting very difficult to get exact information from him.

I am a FTB, so it all seems very scary to me! Can anyone tell me where I stand? What should I do now?

davidmcn

Have you actually exchanged contracts?

If so then I would presume the seller is satisfied that he'll be able to redeem the mortgage. Completion won't happen unless his solicitor knows there are enough funds to discharge his mortgage, so your position is protected.

His lack of building insurance isn't your problem.

ishi

davidmcn wrote: »

Have you actually exchanged contracts?

If so then I would presume the seller is satisfied that he'll be able to redeem the mortgage. Completion won't happen unless his solicitor knows there are enough funds to discharge his mortgage, so your position is protected.

His lack of building insurance isn't your problem.

I signed the contracts & paid balance to my solicitor. They also received the money from my lender. Not sure if it same as exchanging contracts!

Guest101

Find out if you've exchanged, if you have - you need your own insurance on the building.

ishi

Guest101 wrote: »

Find out if you've exchanged, if you have - you need your own insurance on the building.

My lender is HSBC. I opted for HSBC home insurance during my mortgage application. But so far no money is deducted from my bank account towards home insurance.

G_M

You have not answered the question but I assume you have not Exchanged contracts. 'Signing' the contract means nothing.

Also:

ishi wrote: »

I have signed the contract on 31.08.2016 & agreed on completion date on 12.09.2016. Exchanged contracts?

Yesterday I came to know that current owner has outstanding mortgage on the house which I am buying very normal - most people have
& he is not paying mortgage payment since quite a while. Not your concern

My solicitor told me that house would have been repossessed soon if it was not sold.
but not yet repossessed? Then the owner can sell, assuming he can pay off the mortgage when he reeives your money
solicitor also said we can't complete until we get some closing statement from current lender.
Yes - the seller's solicitor needs to know how much is owed to the mortgage lender. If it is more than the sale price, then there is no guarantee the mortage will be paid off.
If it is less than the sale price, then the mortgage can be paid off when your money is received.

In sellers information form,owner mentioned that he does not have building insurance, so I was assuming that he own the property outright. No.
However, you need to check the property on the day before you Exchange, just in case it has burned down! If it is OK on the day of Exchange, you are fine. You insure it yourself from that day onwards.

All these surprising information coming to me just 3days before completion date!
If you have Exchanged contracts already you have a real problem.

If you have NOT Exchanged contracts yet, then there is not yet an agreed Completion date!

The owner now lives in US, so it's getting very difficult to get exact information from him.
The only information needed (it seems) is the outstanding mortgage. It is not really your concern. HIS solicitor needs to find out, and then HIS solicitor will either
* tell you the sale cannot go ahead, or
* give you a "solicitor's undertaking" (guarantee) that the mortgage will be paid off.

I am a FTB, so it all seems very scary to me! Can anyone tell me where I stand? What should I do now?

You wait and see.

davidmcn

ishi wrote: »

I signed the contracts & paid balance to my solicitor. They also received the money from my lender. Not sure if it same as exchanging contracts!

I'd expect your solicitor to have told you if exchange had happened.

When you say "we can't complete until we get some closing statement from current lender", I suspect you mean the seller can't exchange until he has confirmation that he can cover the full balance to his lender (or that he can enter into some other arrangement with them to discharge their mortgage). A buyer wouldn't normally be copied into any statements or other correspondence between the seller and their lender.

ishi

Thanks G_M & davidmcn. I just spoke to my solicitor- the contracts has not been exchanged & completion date will be moved forward because of delay from seller side.
I also spoke to HSBC home insurance - the policy is in place & will start from date of exchanged contracts.

moneyistooshorttomention

davidmcn wrote: »

Have you actually exchanged contracts?

If so then I would presume the seller is satisfied that he'll be able to redeem the mortgage. Completion won't happen unless his solicitor knows there are enough funds to discharge his mortgage, so your position is protected.

His lack of building insurance isn't your problem.

Agreed.

BTW - You will be the one insuring the property from the date that Contracts are Exchanged. Make sure you do.

anto164

I'd be a bit worried that your solicitor has the mortgage amount from your lender especially as you haven't exchanged yet! You'll be liable for a first payment on a property that isn't actually yours! Why did your solicitor draw down the funds if exchange hasn't even gone ahead?

hazyjo

anto164 wrote: »

I'd be a bit worried that your solicitor has the mortgage amount from your lender especially as you haven't exchanged yet! You'll be liable for a first payment on a property that isn't actually yours! Why did your solicitor draw down the funds if exchange hasn't even gone ahead?

Don't think that's unusual is it? I'm sure we had a similar query on here very recently.


Will wait for other comments as not 100% sure!


Jx