Contract Reassignment Mortgage Nightmare Before Christmas

Tigris

Hi all,

I'm stuck in a difficult legal situation and would appreciate any advice on how to resolve it.

Earlier in the year, I exchanged on a contract reassignment flat purchase in London - essentially buying something off-plan, from an investor who originally put down the deposit with the developer to buy the unit off-plan. In order to do this I obtained a mortgage from the Woolwich, who as I understand from my broker, are one of only two banks to lend on these deals (the other being Kent Reliance). The development was meant to complete at the end of September.

In September, the developer notified my solicitor to say they were delayed and subsequently expected to complete at the end of November. The mortgage offer expiration date was mid December, but we assumed that there would be no further delays, and that there would be sufficient notice if another delay was expected.

Come the beginning of December, we are notified of yet another delay to completion, with an expectation that notice will be served the week before Christmas (though no confirmation). Unfortunately this is the week after my mortgage offer expires (16th December). My broker says they can get the bank to agree a 2-week extension IF my solicitor can submit the Certificate of Title stating we will complete before the end of December. However, he cannot do this without confirmation of a completion date from the developer (as they have only advised they may serve notice that week, and if they serve on the 23rd, there's no way completion will happen in time, as his offices are closed between Christmas and New Year). Once notice is served, if I do not complete within ten working days, the developer can sue me for breach of contract and I would lose the significant monies paid at exchange (life savings).

I could of course re-apply for a brand new offer, but the bank would cancel the existing offer to do so, and they are advising that with it being Christmas there is a backlog of applications and it would most likely not be ready in time. I have advised the completions manager at the developer of this in writing, saying that if they can guarantee me an extension on completion (if required) I will reapply for a new mortgage now and we will just complete once it comes through in January (even though this means incurring a second set of mortgage application fees). However, they are refusing to give this in advance and their solicitors are not responding to attempts from mine to resolve the issue. They have merely said in woolly language they would look at it on a case-by-case basis if and when it happened.

I could apply for another offer at the other lender Kent Reliance, but my broker has advised that if they know there is already an existing mortgage offer on the property they will probably not advance the application. So that option just seems like a waste of money in application fees, as there is a box on the form explicitly asking this.

So, to summarise, I seemingly cannot escape the risk of not being able to complete within the ten days from notice being served due to a situation created by the developer's delays and which they appear unwilling to help resolve. If I stick with my current offer and they serve notice late in the week before Christmas, we will not complete in time and the mortgage offer will expire. If I re-apply for a new mortgage offer, it most likely will not be issued in time for the completion window. The developer theoretically stands to gain from this, because they could then resell the unit at the current market price and net a nice profit (though clearly this can't be ethical or good business practice).

Any ideas on what I can do? Appreciate any insights, thanks for taking the time to read.

Thrugelmir

Tigris wrote: »

if I do not complete within ten working days, the developer can sue me for breach of contract and I would lose the significant monies paid at exchange (life savings).

I recommend that you simply hold your nerve. You'd have another mortgage in place well before they'd get a court hearing. Given that the developer is overrunning the schedule. I'm sure that they would allow a little flexibility in the matter. Keep everyone involved clearly informed. Once your existing offer expires, then reapply.