Failed to complete - Penalty Issued - Help needed with some advice

sparky130a

NETACCT wrote: »

Its new build flat and its common to use the solicitor recommended by the seller.
damage is already done and lots of things are at stake...
Past is past and nothing can be done about it.

I am looking for some practical advice if it can help to some extent?

Only if you have 3 letters written on your forehead.

As for practical advice, your best scenario is damage limitation. Be glad there isn't a chain.

Bossypants

NETACCT wrote: »

Its new build flat and its common to use the solicitor recommended by the seller.
damage is already done and lots of things are at stake...
Past is past and nothing can be done about it.

I am looking for some practical advice if it can help to some extent?

I feel for you but I'm not sure what you're looking for from us? You've already listed your only options in your first post: Find a way to complete or breach the contract and pay for it. You need to sort this out asap before thinking about anything else, dragging it out will only make it worse.

Afterwards, the only thing that might maaaaybe give you someone to pursue for this is if your own solicitor failed to warn you about the dangers of exchanging without the ok from the lender's solicitor, but it would be a stretch and would depend on the exact circumstances.

Good luck OP!

AdrianC

NETACCT wrote: »

Mortgage was approved and offer letter issued and received on 22 Oct 2016.

OK, but when did you exchange contracts?

Bank's solicitor had min 50 working days to complete the legal inquiries.

Right.

Let's go back and look at the various steps.

1 - You get a mortgage approval before you put an offer in - they are saying "Yes, we are happy with the concept of lending you the money, so long as you are buying a property we agree is acceptable as security."

2 - You put an offer in - you are saying "I'd like to buy this place for this price, so long as all the legals stack up and the finances can be put in place."

3 - You exchange contracts - you are saying "Yes, everything is fully in place, including the money, I am happy with the result of all the legals, and I am happy to be contractually bound to buy this place on this basis on this date."

4 - You complete - you are saying "Here's the money, as we agreed previously. Thanks for the keys".

You seem to have done the third step before you were in a position to be ready to, because your lender was not happy with the property as security. So they've refused to provide the money for the fourth step. You are now in breach of the contract you signed and exchanged at the third step, because you cannot do what you said you could do, because you said you'd do it before you were ready to.

eddddy

NETACCT wrote: »

1. Housing group had a single contract to sell all the flats (76 in total) to an Investment Company.
2. I had an agreement to buy a flat from the Investment Company.
3. Its Sub-Sale structure

...
12. Mortgage situation is still unclear and I believe, it will be now invalid as the transaction will be back to back sale

I'm no expert, but I don't think this would be a back-to-back sale.

The housing group would have been selling the freehold or headlease of the block(s) to the investment company.

The investment company was sub-selling you a lease of one flat in the block on the same day

Hopefully, the investment company will still be selling you that lease, but perhaps a week or two later.

i.e The lease of your flat was not sold on 11th Jan. A freehold or headlease of a block was sold on 11th Jan. (So there is no back-to-back sale of the lease on the flat.)

You still want to buy from the same vendor, but you are late completing.

Ask your solicitor whether the contract allows for a £19k 'penalty; for late completion.

kinger101

Isn't there usually some sort of period after which the completion notice has been issued which the purchaser has to finalize the sale?

You really need to speak to your conveyancer about this, and possibly see if the bank can be pushed along.

G_M

NETACCT wrote: »

Mortgage was approved and offer letter issued and received on 22 Oct 2016.

Bank's solicitor had min 50 working days to complete the legal inquiries.

7. Bank's solicitor did not finish their inquiries even as of today and they are still continuing it with my solicitor

Two solicitors involved. Therefore Exchange should not take place till BOTH say everything is in place.

It appears the bank's solicitor was satisfied (so the mortgage was offered) but your solicitor was not satisfied (enquiries outstanding) so he should not have Exchanged.

Mortgage was approved and offer letter issued

Just to be clear. Was this
* a mortgage in principle (you are financially acceptable), or
* a firm mortgage offer (the property is acceptable)

NETACCT

1. Mortgage in principle approved for me in Nov 2015 and it was valid until Oct 2016 (1 Year). So no issues here
2. Valuation of the property done by bank on: 10/05/2016 (This would be valid for six monthis). Bank happy with the valuation report and happy to lend
3. As its new build flat, completion date is always estimated. I did not ask the bank to issue formal mortage offer as it would have been valid only for 3 months (as per their last rule)
4. I exchanged the contract with the Investment company to buy the flat on: 08/08/2016 (without formal mortage offer).
5. Bank issued formal mortage offer and received on 22 Oct 2016. This is now valid for six months as per their current rules. At this stage, I believe bank's solicitor and my solicitor should have started communication.
6. I am not sure if any other buyer is also in similar sitution as I can't ask and doesn't make any difference to my case
7. The lease is now owned by the Invest Company, dated 11 Jan 2017. I have been sent the copy of the lease as they want me to complete by transfering the lease on my name.

Which inquiries are they? -

Legal inquiries. Comments from my solicitor are,

The CML form would have been available when the valuation was done and the discount was also noted at that time
We sent them the development documents, on 14th November, 1st December, 15th December, 29th December 5th January and every day since.
The points with regards, income, discount, structure were things that ought to have been addressed at application.

Are you saying that they approved but then retracted as they discovered something that requires more inquiry?
No, they are still continuing with their inquiries. As of now, bank's solicitor is still waiting for some confirmation from bank re Sub-Sale structure

Is it something they would claim you should have declared?
Bank's solicitor raising CML and Sub-Sale structure which bank were aware of since begining and I have proof.

Was the letter of approval subjects to conditions?
I think, every offer is subject to conditions. So can't say anthing on this legal matter

You should not have exchanged until all legal enquiries were complete and your Solicitor should have advised you of that.
In your shoes I'd be wanting to know why your solicitor allowed you to exchange before your lender's solicitor had finished doing his side of things.

My solicitor said, its very common for new build as the completion can be after few months or even years. And the mortage offer can become invalid. So advised me to exchange without formal mortgage offer.


As for practical advice, your best scenario is damage limitation.
Please any details?


You still want to buy from the same vendor, but you are late completing.
Yes, I want to complete and lot of money and 1.5 years countless efforts are at stake. I have asked them

Ask your solicitor whether the contract allows for a £19k 'penalty; for late completion.
Asked them to confirm


Isn't there usually some sort of period after which the completion notice has been issued which the purchaser has to finalize the sale?
This is what I questioned. I failed to complete on 11 Jan 2017. No notice issued to me and Investment Compnay completed the sale themselves, same day.
My solicitor says, the contract between Investment company and the housing group allows them to do so.

Two solicitors involved. Therefore Exchange should not take place till BOTH say everything is in place.
Is this the legal position which I can argue and claim against my solicitor?

sparky130a

NETACCT wrote: »

1. Mortgage in principle approved for me in Nov 2015 and it was valid until Oct 2016 (1 Year). So no issues here
2. Valuation of the property done by bank on: 10/05/2016 (This would be valid for six monthis). Bank happy with the valuation report and happy to lend
3. As its new build flat, completion date is always estimated. I did not ask the bank to issue formal mortage offer as it would have been valid only for 3 months (as per their last rule)
4. I exchanged the contract with the Investment company to buy the flat on: 08/08/2016 (without formal mortage offer).
5. Bank issued formal mortage offer and received on 22 Oct 2016. This is now valid for six months as per their current rules. At this stage, I believe bank's solicitor and my solicitor should have started communication.
6. I am not sure if any other buyer is also in similar sitution as I can't ask and doesn't make any difference to my case
7. The lease is now owned by the Invest Company, dated 11 Jan 2017. I have been sent the copy of the lease as they want me to complete by transfering the lease on my name.

Which inquiries are they? -

Legal inquiries. Comments from my solicitor are,

The CML form would have been available when the valuation was done and the discount was also noted at that time
We sent them the development documents, on 14th November, 1st December, 15th December, 29th December 5th January and every day since.
The points with regards, income, discount, structure were things that ought to have been addressed at application.

Are you saying that they approved but then retracted as they discovered something that requires more inquiry?
No, they are still continuing with their inquiries. As of now, bank's solicitor is still waiting for some confirmation from bank re Sub-Sale structure

Is it something they would claim you should have declared?
Bank's solicitor raising CML and Sub-Sale structure which bank were aware of since begining and I have proof.

Was the letter of approval subjects to conditions?
I think, every offer is subject to conditions. So can't say anthing on this legal matter

You should not have exchanged until all legal enquiries were complete and your Solicitor should have advised you of that.
In your shoes I'd be wanting to know why your solicitor allowed you to exchange before your lender's solicitor had finished doing his side of things.

My solicitor said, its very common for new build as the completion can be after few months or even years. And the mortage offer can become invalid. So advised me to exchange without formal mortgage offer.


As for practical advice, your best scenario is damage limitation.
Please any details?


You still want to buy from the same vendor, but you are late completing.
Yes, I want to complete and lot of money and 1.5 years countless efforts are at stake. I have asked them

Ask your solicitor whether the contract allows for a £19k 'penalty; for late completion.
Asked them to confirm


Isn't there usually some sort of period after which the completion notice has been issued which the purchaser has to finalize the sale?
This is what I questioned. I failed to complete on 11 Jan 2017. No notice issued to me and Investment Compnay completed the sale themselves, same day.
My solicitor says, the contract between Investment company and the housing group allows them to do so.

Two solicitors involved. Therefore Exchange should not take place till BOTH say everything is in place.
Is this the legal position which I can argue and claim against my solicitor?

Bloody hell. You're making a simple house transaction hard work.

G_M

sparky130a wrote: »

Bloody hell. You're making a simple house transaction hard work.

Yes.

And either you and/or one of the solicitors messed up (possibly all three).

Exchange should not have taken place until all enquiries completed satisactorarily. What's the point of checking things (enquiries) if you are already legally commited to buy whatever those checks turn up?

And clearly the 'formal mortgage offer' was conditional (otherwise the money would be forthcoming!) so again, you (under advice from one or both solicitors) should not have Exchanged till the conditions were met.

Advice now?

Go in to your solicitor's office, sit down with him and get him to explain

* the current position and your current liabilities
* your current options
* why he Exchanged contracts wihout either ensuring the money was secured or explaining the risks to you in advance

kinger101

Is the solicitor a one man band? If it's a firm, ask for the senior partner.