Seller is buying uncompleted new build

Ara1985

I had my offer accepted on a flat that I viewed last weekend. At the time to sellers hadn’t found a property but I am not in a rush to move so I was happy to wait a bit. As a first time buyer currently living with family I am chain free myself.

Today it has come about that the sellers have found a place. Great!
Except they are buying a new build which isn’t due to be ready until July.
As I said I was prepared to wait, but I wasn’t expecting to wait as long as six months.

Because they are buying a new build they need to exchange within 28 days, meaning I have to put my deposit forward. All Good-I have the deposit ready to go and I am not in a selling chain so I am not facing any issues there.

However, I am concerned that July is just a provisional date and this could go on till August…September…. Not only am I not prepared to wait that long, but my mortgage approval is only valid for 6 months. I was told by the estate agent the mortgage lenders usually extend for a few weeks if a new build is involved but who’s to say it will only be a few weeks.

From the seller’s point of view, if I pull out they not only have to find another buyer but a buyer who is also ready to exchange within 28 days.

My parents have suggested offering a lower price but I don’t think they will accept this as they already refused two offers previously and accepted at -£2000 the guide price.

I am wondering if I could ask for some kind of agreement that if their place isn’t ready in 6 months from now we complete and they have to move out and find another accommodation until their place is ready. Otherwise I could sit twiddling my thumbs waiting on them and unable to pull out because I have already put £26000 deposit down which I will lose among the other fees.

I have emailed my solicitor regarding this but it was late in the day and I won’t get a response from them now until Monday.

Has anyone found themselves in a similar situation?

da_rule

You have a few options. You can tell them that you will exchange but without a deposit or a merely token deposit. But they may need the deposit for their transaction.

You can also put a clause in the contract that says that you can cancel the contract without penalty if completion hasn't taken place by X date. It'll then be up to them whether they want to move into rented if there is any delay or lose the sale and potentially their house.

Ara1985

da_rule wrote: »

You have a few options. You can tell them that you will exchange but without a deposit or a merely token deposit. But they may need the deposit for their transaction.

You can also put a clause in the contract that says that you can cancel the contract without penalty if completion hasn't taken place by X date. It'll then be up to them whether they want to move into rented if there is any delay or lose the sale and potentially their house.

If I could get them to agree to the latter I would be satisfied.

da_rule

You need to be careful if giving all your money over as a deposit as the standard conveyancing rules allow the seller to use the deposit they receive from their buyer as a deposit on any property they are buying.

Therefore they might not actually have the deposit to give back to you should you cancel the contract.

When_the_going_gets_tough

It's not your responsibility to manage an open ended completion to suit the builder. If your vendors want to enter into that sort of agreement that is their problem. You need to agree a fixed completion date and leave it to them to move out and rent. Or they shouldn't try and sell so far in advance of their new build.

Ara1985

da_rule wrote: »

You need to be careful if giving all your money over as a deposit as the standard conveyancing rules allow the seller to use the deposit they receive from their buyer as a deposit on any property they are buying.

Therefore they might not actually have the deposit to give back to you should you cancel the contract.

Didn't think of it like that!

eddddy

da_rule wrote: »

You can also put a clause in the contract that says that you can cancel the contract without penalty if completion hasn't taken place by X date.

Newbuilds often have a long-stop date in the contract - i.e. if the house isn't ready by the long-stop date, the buyer can back out.

If the seller has a long-stop date in their purchase contract, they may agree to giving you the same long-stop date.

But if they don't have a long-stop date in their purchase contract, realistically they can't offer one to you.

da_rule

eddddy wrote: »

But if they don't have a long-stop date in their purchase contract, realistically they can't offer one to you.

They can, they just have to take the risk. It boils down to how confident the developers are in their completion date and how confident the OP's sellers are in the developer. Also, how much the OP wants the property and how long he is willing to wait for.

AnotherJoe

I would walk. They could run you up to July or whenever and then say the new house is going to be six months late amd you'll be in limbo or worse. Suppose you get made redundant in the very long period between exchange and completion ? The offer would be withdrawn.

Tell them you can't take the risk and either they need to move into rented so you can buy right now, , or forget selling now and look to sell in later spring or early summer.

Then go find somewhere else if they won't exchange amd complete within a few weeks.

Richard_Webster

I used to warn buyers of uncompleted new builds, who were also selling, that they might have to move out in order to complete on a fixed date with their buyers. Not sure many solicitors do this.

However, they chose to buy off plan (and probably pay over the odds) so they should be prepared to move out., So you get agreement for a fixed completion date or one specified by them (to fit in with their hoped for completion of their new build) but in any event no later than when your mortgage runs out.

rtho782

Don't exchange to suit the vendors.

We were FTBs, our vendors were buying a new build. They exchanged on their new house a long time before we did, it was their risk to take. Our offer was accepted in Jan, they must have exchanged some time in Feb, we did not exchange till mid May and completed on 31st May. They first wanted no completion date in the contract and for us to complete on 2 weeks notice from them, I told them I would not exchange on that basis and they agreed to go into rented if not ready to complete on 31st.

Why should you take on liability for a house, start insuring it, etc on short time scales because of their decision to buy a new build.

I would not want more than a week or so between exchange or completion. If they want to exchange months in advance on a new build that's up to them.

Bear in mind that if they have reserved their new build then they have 28 days to exchange now, so if you refuse to exchange they either exchange on theirs anyway and take the risk, or lose their new build, as no other buyer will be found and ready to exchange in 4 weeks.

The power is in your hands, don't be bullied, be ready to walk.