Right of First Refusal - how to word it?

MNrhubarb

Thanks

It doesn't stipulate that it has to comply with the Law of Property Act. I do know that I have addressed it to the right person. It is in writing - not an email. It will be sent recorded delivery. It does quote the relevant passages of the contract. I have worked out 6 weeks from 1 Feb and given them the date of 15 March for when they need to give us a decision.

The most important thing, for me, was to put that our rights as sellers are not affected by the clause. Therefore we are able to pull out at any time before contracts are exchanged, although that may mean we are liable for some costs.

davidmcn

MNrhubarb wrote: »

The most important thing, for me, was to put that our rights as sellers are not affected by the clause. Therefore we are able to pull out at any time before contracts are exchanged, although that may mean we are liable for some costs.

I'm not sure whether you're referring to a sale by the HA exercising their option, or a sale to a third party if the option isn't exercised, but if you mean the former then you do not have the right to pull out.

MNrhubarb

davidmcn wrote: »

I'm not sure whether you're referring to a sale by the HA exercising their option, or a sale to a third party if the option isn't exercised, but if you mean the former then you do not have the right to pull out.

How do we not have the right to pull out? Are you saying that if we serve written notice of an intention to sell, we then have to ensure that a sale goes through? Because I've gone through the contract and can find nothing that binds us to a sale. The para I highlighted would seem to give us rights as in any private sale.

MNrhubarb

If we are contractually obliged to sell then I will not post this notice. I have not read anything to make me think this is so, nothing obvious anyway. I was about to post the letter at lunch time. I will now hold off.

I did enquire with our original solicitors but he's on holiday for 2 weeks.

davidmcn

MNrhubarb wrote: »

How do we not have the right to pull out? Are you saying that if we serve written notice of an intention to sell, we then have to ensure that a sale goes through? Because I've gone through the contract and can find nothing that binds us to a sale. The para I highlighted would seem to give us rights as in any private sale.

Like I said in post #8, the whole point is that your contract is formed by the exchange of your notice and the option acceptance from the HA.

You have the rights (and obligations) as stated in the Standard Conditions. Have a read through them, if you haven't already. Those don't include a right for either party to walk away.

MNrhubarb

Yikes!

That seems quite restrictive as what if our chain fell through? Or something happened which meant we no longer had a mortgage offer? There are a myriad of circumstances which may affect a sale - if what you are saying is correct then once we have service notice and they accept, we have to move out no matter what happens.

That is very scary. I don't think we'll ever be in such a certain position and with 2 kids, I don't want to put the family in that position. I really did think that this: "The current Law Society standard conditions of sale shall be deemed to be incorporated herein so far as the same are applicable to a sale by private treaty and are not varied by the provisions of this Clause and in case of any variation or inconsistency the provisions of this Clause shall prevail." protected us from being legally bound to sell.

Ugh, what a difficult position this clause has put us in.

MNrhubarb

Does this not apply to us?

it is not a means of forcing a landlord to sell his freehold interest in a property (this is provided by the enfranchisement provisions of the Leasehold Reform, Housing and Urban Development Act 1993). It is an opportunity for the tenants to purchase that interest before it is offered on the open market or by auction.
the right follows a landlord’s decision to sell and the tenants can only react to the landlord’s offer. He can withdraw the offer at any time before the contract is binding.

From this site: http://www.lease-advice.org/advice-guide/right-of-first-refusal/

steampowered

MNrhubarb wrote: »

The most important thing, for me, was to put that our rights as sellers are not affected by the clause. Therefore we are able to pull out at any time before contracts are exchanged, although that may mean we are liable for some costs.

Unfortunately I think that you would be required to complete the sale, if you gave the requisite notice and the housing association then decided to exercise its option.

1) You grant the housing association an option to purchase the property on the terms set out in the clause.
2) The option becomes exercisable if you serve written notice stating that you intend to sell.
3) The price of the option is the open market value of the property, to be assessed by a RICS professional if you do not agree a valuation with the housing association.
4) If the housing association does not respond to your notice in six weeks, you can go ahead and sell the property to somebody else.

The housing association's option is triggered as soon as you give it notice stating that you intend to sell. There are no further conditions on the housing association's ability to exercise its option to buy the property. Once the housing association exercises its option you will not be able to back out of the sale.

You don't need a separate exchange of contracts. You already have a contract. The Law Society Standard Conditions of Sale are all the terms you need, and they are already incorporated into your contract.

For that reason I don't think you should be giving the Housing Association notice until you are pretty sure that you want to sell.

In reality the conveyancing process usually takes 6 weeks anyway, so you don't actually need to serve notice until you are pretty confident you've found a new house.

steampowered

MNrhubarb wrote: »

Does this not apply to us?

it is not a means of forcing a landlord to sell his freehold interest in a property (this is provided by the enfranchisement provisions of the Leasehold Reform, Housing and Urban Development Act 1993). It is an opportunity for the tenants to purchase that interest before it is offered on the open market or by auction.
the right follows a landlord’s decision to sell and the tenants can only react to the landlord’s offer. He can withdraw the offer at any time before the contract is binding.

From this site: http://www.lease-advice.org/advice-guide/right-of-first-refusal/

No, it doesn't apply.

That article talks about the pre-emption rights which apply where a landlord which owns a block of flats is selling the freehold. The terms of those pre-emption rights are set out in statute.

In your case you are not dealing with a statutory pre-emption right. You have a contractual pre-emption rights. The terms of the Housing Association's rights are set out in your contract, not in any separate law.

MNrhubarb

Hmm that's not good news. We are certain the HA will not buy, but they will take the whole 6 weeks to tell us this. For instance, I sent a tentative email to them 3 weeks ago asking if they would be interested if we did serve notice. They acknowledged receipt of the email and understood we were not serving notice at that time, but they never gave an answer.

So we'd be left 6 weeks down the line by which time any offer we put on a house would be in jeopardy as a seller may not want to wait that long for us to get our act together.