When is 'completion' date, not 'completion' date?

Bettycheese

My Partner and I recently took out a mortgage for a property we’re renovating.

The paperwork with our mortgage offer stated that the first mortgage payment would be taken on the 15th of the month following completion on the property. On this basis we agreed a completion date of 1st September, meaning that the first mortgage payment would be taken on 15th October.

We have a tight budget for the renovation work, and as we’re also still paying rent for the next 3-4 months, every penny in our renovation budget counts. We were therefore shocked and concerned when we realised that our first mortgage payment had been taken today (15th September), a month earlier than we expected.

We called the mortgage lender, and checked that our understanding of when the first payment would be taken was correct (it was). We pointed out that as we had completed on 1st September, there must have been a mistake to take the payment today. The lender informed us that their definition of completion is not the widely agreed and understood definition (i.e. the date the funds are transferred to the vendor, you receive the keys, and the title deeds reflect you as legal owner) but instead they define it as the date the solicitor requests the funds. In our case this was apparently August 31st, and therefore they consider we completed in August, not September. They also stated that our solicitor should have been aware of this, and let us know.

We got in touch with our solicitors who insist that as far as they are concerned, there is only one completion date, in our case 1st September, and that we should take it up with the lender.

So it seems that due to a difference in interpretation of an accepted legal term, we are over £1200 down in our renovation funds, which right now is fairly catastrophic so early in the scheme of things.
Nothing in the paperwork from our lender alludes to them having their own definition of completion, and so we had no reason to question this.

We’re at a slight loss as to how to move forward. Our solicitor has effectively washed her hands. Were we naïve not to confirm with the lender what they meant by ‘completion’ even though our solicitor agrees that there isn’t more than one legal definition? Do we have any redress with our lender?

We understand that the number of mortgage payments, amount of interest and length of loan would have been the same whenever the first payment was taken, and that the first payment would have been higher anyway to allow for interest accrued (would have been bout £1500 based on lenders illustration) so are not technically out of pocket, but the issue is cash flow. We hadn't budgeted for a mortgage payment in September so have had to take the £1200 out of our renovation budget. i.e we need that £1200 more now, than we would in 20 years time when the last mortgage payment would have been a month later (simplistically).


Thanks.

ACG

Did you tell the solicitors you wanted to complete after the 31st and why?

If not, then I think it is difficult to point fingers at anyone for making a mistake as such. I would not say you are naive, this is just one of those things where nobody has really done anything wrong, it is just you who is stuck carrying the can.

If you did tell the solicitors, then it is clearly their fault.

But it is not uncommon for the solicitors to request funds a day or 2 before completion takes place, to ensure the funds are in hand incase any last minute problems crop up. The lender will start the mortgage from the date they release the funds.

Bettycheese

Thank you ACG. We can see how the situation has arisen, but are frustrated with the solicitor - the whole conveyancing process has been a catalogue of errors (our private financial details sent to a strangers email address, sending us confidential documentation relating to other people's purchases, chasing us to complete documentation that they hadn't yet sent to us, it goes on). Several times we told our solicitor that we're unfamiliar with the buying process and asked her to explain next steps and what happens when etc. Any information we did get had to be dragged out of her, and not once did she explain to us about requesting the funds prior to completion date, and what the implication of this to us would be. If she had, we would have asked to move completion back by just one or two days, meaning we wouldn't be in this mess now.

ACG

Im not sure I would expect a solicitor to explain the implications of requesting a day early - in 5 years, I have never had this crop up as an issue so it must rarely happen.

I genuinely do feel for you, I dont mean to come across as heartless and I am the first to fight for customers rights but I am struggling to find fault with the solicitors actions. Had they known what you had wanted to achieve then it is a different story.

kingstreet

FWIW had you actually completed on 1 September, the first payment on 15 October would have been for the full month of October, plus accrued interest from 1 September to 30 September, so you would have been paying the butt-end of two months payments.

Does knowing that increase or reduce your pain?

davidmcn

kingstreet wrote: »

FWIW had you actually completed on 1 September, the first payment on 15 October would have been for the full month of October, plus accrued interest from 1 September to 30 September, so you would have been paying the butt-end of two months payments.

Does knowing that increase or reduce your pain?

Yes, I'm not sure if the OP understands that they're not actually losing £1200 and are merely concerned about the cash flow? And I would have expected their mortgage offer to explain somewhere what the lender views as the completion date - some allow a period of grace but the solicitor ought to know that some, not unreasonably, charge from drawdown.

Bettycheese

Thanks. I perhaps didn't make it clear in my original post. We totally understand that the number of mortgage payments, amount of interest and length of loan would have been the same whenever the first payment was taken, and that the first payment would have been higher anyway to allow for interest accrued (would have been bout £1500 based on lenders illustration) so are not technically out of pocket, but the issue is cash flow. We hadn't budgeted for a mortgage payment in September so have had to take the £1200 out of our renovation budget. i.e we need that £1200 more now, than we would in 20 years time when the last mortgage payment would have been a month later (simplistically).

We have scoured the paperwork from lender, and nowhere does it give their definition of completion, and they also told us on the phone yesterday that they don't publish this definition anywhere.

Time2go

We are nearly in same position was originally going to complete 31 oct but they sat on mortgage if complete with less than 12 days to go tillend of month first payment will come out on12th (so 12 November) and next payment following 1st (1st December) however if we completed on 2nd 1st payment would be 1 December. Like you money is tight for us at start and we need every penny (new buildwoth no carpets) so to be safe I'll now move completion date to 3rdnivenber