Wow! Have you ever heard of anything like this? Advice please

barrydh

my friends daughter and partner have been in the process of buying a flat. They have moved out of their existing flat and into their parents for a couple of weeks until completion. yesterday they found out the seller doesnt even own the property he is selling. The seller had exchanged on the flat in October but never completed. i have been informed he cannot sell until he has owned the flat for a minimum of 6 months which means the sale to my freinds cannot now go through because of the time span. They have spent about £1500 on various fees and are extremely stressed let alone the inconveniance of having to live back with their parents. I would be grateful if someone could answer these questions.
1. what responsibilty do estate agents have with this? are they obliged by law to find out if a seller actually owns the property they are selling?
2. same with solicitors? Both the sellers and buyers solicitors have been in correspondence but no-one seemed to find out if the seller was the legal owner.
3. What recourse do my friends have?
4. is this fraud?

thank you for taking time to read this and i look forward to any replies.

csgohan4

if you have exchanged, then you can claim costs from the vendor for failure to complete.






When you say they don't the house, please specify? are they on the Land registry deeds? A scammer? Restricted selling on their mortgage e.t.c?


They either own it or they don't, whether they can sell it or not is a different matter

moneyistooshorttomention

I guess the vendor was planning to "flip it" in very short order - ie get a buyer pulled far enough into purchasing that they'd hand over a 10% deposit. At that point the vendor would "complete" on his flat and proceed with the sale.

It would appear that maybe the vendor doesnt even have enough money to be able to "complete" on his flat until he has a 10% buyer deposit under his belt - or is trying to pull this stunt anyway even if he does. Sounds like the vendor has tried to be "too clever for their own good" and overrated their ability to do what they want (ie make a quick profit without having had much outlay to achieve it). I'd rate the vendor as "probably not got many more than 2 brain cells to rub together" - and one of them is on holiday at the moment.

I'm surprised the vendor didnt do their homework enough to realise their buyer might well turn out to be someone needing a mortgage and would have problems getting one on a property the owner has "bought" so recently.

I dont think I'd want to try and keep up with the "twists and turns" in that vendors mind about what they were thinking/planning - and would probably "drop" the flat, rather than risk throwing good money after bad.

Very frustrating for your friends - my sympathies the vendor has put them through this.

KRB2725

Had your friends exchanged?

davidmcn

csgohan4 wrote: »

When you say they don't the house, please specify?

I presume by:

barrydh wrote: »

The seller had exchanged on the flat in October but never completed.

they mean they are in a contract to buy and are contractually entitled to complete their purchase "back to back" with the onward sale (or are intending to do it shortly before). Which is also legally ok, the problem is as stated - mortgage lenders usually insist on the seller having been registered as owner for six months.

I don't think EAs or solicitors necessarily have a duty to discover this at an earlier stage - obviously they have discovered it now. We don't know the timeline but perhaps the conveyancing has only swung into action once a mortgage offer was produced (and everyone knew that the purchasers were actually in a position to proceed).

kinger101

(1). Duty of EA is unclear. There are certain things described as "material information, which must be described accurately. This includes the nature of the ownership, and the length of any lease. However, most EA's would take what the owner tells them at face value. If they knew they didn't own it, you'd have a case. They'd certainly know about the 6 month rule. EAs usually ask people how long they've owned a property.

http://webarchive.nationalarchives.gov.uk/20140402142426/http://www.oft.gov.uk/shared_oft/estate-agents/OFT1364.pdf

(2) EA should have checked land registry details early on. I'm not sure why this hasn't happened here. They typically get sent by the seller's conveyancer.

I think you need to find out why this wasn't flagged by your solicitor much earlier. When did you solicitor receive the conveyancing pack for seller's solicitor? Did it contain land registry details? If not, did your solicitor query this?

And if you can, what the EA knew.

EDIT - has the "vendor" still not completed? If so, I think their notice to complete would have expired. If you still want the property, just contact the actual owner who might still want to sell. Most of your paperwork is still relevant.

p00hsticks

barrydh wrote: »

i have been informed he cannot sell until he has owned the flat for a minimum of 6 months which means the sale to my freinds cannot now go through because of the time span. .

I'm not sure how such a condition could be enforced on the owner (perhaps something in the lease to try to prevent 'flipping') , but if your friends are buying with a mortgage it's likely that their mortgage providers will have a similar condition that would prevent them from buying anyhow.

eddddy

Is the property an off-plan new-build by any chance?

Buyers sometimes exchange contracts on those, then assign (sell) the contract to somebody else.

If so, EAs are normally very upfront about it (assuming the vendor tells them), because only specialist mortgage lenders will touch them.

Just FYI - these are examples:

Connells are delighted to offer to the market the assigned contract for this off plan luxury one bedroom apartment

http://www.rightmove.co.uk/property-for-sale/property-51267661.html

SOLD AS AN ASSIGNABLE CONTRACT

http://www.rightmove.co.uk/new-homes-for-sale/property-59633180.html

getmore4less

Find out who really owns it, they are probably still keen to sell.

Mobeer

Essentially you have something like:

(Seller) Person A owns the house, exchanges contract with Person B to sell house to person B
Contract says B is free to complete at short notice

(Buyer) Person B (your vendor) has exchanged with A, can complete at short notice
Person B has exchanged(?) with you to sell property to you, can complete on a fixed date

(Third Party) You have exchanged with Person B to buy the property.

Everything above would work ok if you were paying cash. The problem you have is that many mortgage lenders refuse to lend on such deals (where B owned the property for less than 6 months). That said there are other mortgage lenders who will lend in these cases. I think you need the services of a mortgage broker who understands these sort of deals and knows where to look.

Useful reading:
http://www.fridaysmove.com/what-happens-%E2%80%98sub-sale%E2%80%99/15503

AnotherJoe

barrydh wrote: »

my friends daughter and partner have been in the process of buying a flat. They have moved out of their existing flat and into their parents for a couple of weeks until completion. yesterday they found out the seller doesnt even own the property he is selling. The seller had exchanged on the flat in October but never completed. i have been informed he cannot sell until he has owned the flat for a minimum of 6 months which means the sale to my freinds cannot now go through because of the time span. They have spent about £1500 on various fees and are extremely stressed let alone the inconveniance of having to live back with their parents. I would be grateful if someone could answer these questions.
1. what responsibilty do estate agents have with this? are they obliged by law to find out if a seller actually owns the property they are selling?
2. same with solicitors? Both the sellers and buyers solicitors have been in correspondence but no-one seemed to find out if the seller was the legal owner.
3. What recourse do my friends have?
4. is this fraud?

thank you for taking time to read this and i look forward to any replies.

I think there are some mixed messages going on here and this doesn't ring true. (it might be but on balance of probabilities especially since you mention the 6 month rule which is nothing to do with having completed or not ...)
Whats more likely is that the vendor bought in October and your friends lender now wont lend to them because the last mortgage was less than 6 months ago.

The alternative is that fraud is being committed, plain and simple.

Let their solicitor sort it out, fixing this at third or fourth hand through a forum when likely some of the basic information is probably incorrect, isn't going to work.