Completion - funds - keys released

Horizon81

I have a question around completion day and the point at which keys are released from the seller to the buyer.

To make it straightforward lets say the seller owns their house outright.

On completion day, at what point are the keys released? Is it when the seller's solicitor receives cleared funds from the buyer, or is it only after the cleared funds have been electronically transferred from the seller's solicitor to the seller?

davidmcn

Horizon81 wrote: »

Is it when the seller's solicitor receives cleared funds from the buyer, or is it only after the cleared funds have been electronically transferred from the seller's solicitor to the seller?

The former. The seller has control of the money at that point. Transferring it on to the seller themselves often doesn't happen until a subsequent day.

Horizon81

davidmcn wrote: »

The former. The seller has control of the money at that point. Transferring it on to the seller themselves often doesn't happen until a subsequent day.

I suspected that it would be the former and so the relationship between seller and solicitor is clearly one of trust.

If there was a mortgage involved and X amount needed to be paid to the lender to re-pay the balance, does the same still apply? i.e. the lender is satisfied once the money is with the sellers solicitor? Or do they insist that the money is transferred to them prior to keys being released?

davidmcn

Horizon81 wrote: »

If there was a mortgage involved and X amount needed to be paid to the lender to re-pay the balance, does the same still apply?

Yes - the solicitor will usually ensure they have enough cash to redeem the mortgage the next banking day, in case completion happens too late in the day to get the money out again.

Horizon81

davidmcn wrote: »

Yes - the solicitor will usually ensure they have enough cash to redeem the mortgage the next banking day, in case completion happens too late in the day to get the money out again.

Sorry, I don't know what you mean by the solicitor having enough cash. I thought they only released the keys upon having received cleared funds.

mije1983

Horizon81 wrote: »

Sorry, I don't know what you mean by the solicitor having enough cash. I thought they only released the keys upon having received cleared funds.

The property could well have been sold for less than the outstanding mortgage (negative equity). In that case, that's not the buyers concern, they have paid the agreed price so the keys will be released to them. The solicitor/vendor/lender will have had a plan to cover the difference between the 2 prices.

pinkteapot

In theory - solicitor confirms legal completion has happened (they'll phone you) and then the keys are transferred.

In reality, it's the option you haven't listed - when the seller has finished moving out (unless you're buying an already vacant and cleared property).

With my last two purchases:

1) Idiot vendor decided they could move themselves out of a 4-bed house with a rented transit. Completion happened mid-morning. Vendor brought the keys to the EA just before 5pm. Luckily, we were in rented at the time and not moving in on the day, or we'd have been fuming.

2) We were in the middle of the chain:

Our sale: Our removal lorry was packed before completion, which happened around 11am. We'd arranged (via the EA) for the buyer to come round as soon as completion happened. This saved us taking the keys into the EA's office in town. Buyer came round and we left.

Our purchase: We arrived about noon (completion had happened). Sellers' removers were still loading up. Seller left at about 1.30pm, so we had a surprisingly unnerving 90 mins sat outside, parked behind our removal lorry. It's a very odd feeling when you don't have keys to any house and your belongings are on a truck.

Everyone varies in how long they take to move out on the day. That's why a lot of removal companies have a clause saying they'll charge extra if the move goes on beyond 6pm - it's because they often end up waiting around before they can start unloading.

PasturesNew

The paper based process is:
Your money goes from your solicitor to their bank. Their solicitor sees the money and lets your solicitor know they have it.
That is now "completed".
Your solicitor phones you. Their solicitor phones the Estate Agent to say "money received, release the keys". The Estate Agent will often phone you too to say "come and get them".

Of course.... having paid and having the keys doesn't mean the last people have finished packing/moving yet and it's quite common for there to be a delay with vans waiting....

I got my telephone call about 10.30am or so ... so I got the keys .... the people hadn't finished moving out until 5.30pm or so as they were doing it themselves and took a truck of broken furniture etc to the tip and were turned away as you needed to have some license for such a quantity in that type of vehicle ... after that they never caught up.

davidmcn

Horizon81 wrote: »

Sorry, I don't know what you mean by the solicitor having enough cash. I thought they only released the keys upon having received cleared funds.

Having enough cash to redeem the existing mortgage. As they are providing an undertaking to the buyers' solicitors to redeem the mortgage, their completion statement needs to include the amount which will be needed to redeem their clients' mortgage on the day that they expect those funds to reach their clients' lender.

Is there a particular issue you have or are you asking just out of academic interest?

Horizon81

davidmcn wrote: »

Having enough cash to redeem the existing mortgage. As they are providing an undertaking to the buyers' solicitors to redeem the mortgage, their completion statement needs to include the amount which will be needed to redeem their clients' mortgage on the day that they expect those funds to reach their clients' lender.

Is there a particular issue you have or are you asking just out of academic interest?

You could say it's hypothetical at the moment but may become reality. I appreciate the responses as I'm weighing various things up at the minute.

In brief, I own a house outright but am considering selling up and moving to rented. Lots of questions popping in and out of my head, mainly around logistics and cashflow. I'm a born worrier, but I appreciate that one has to trust solicitors in this instance. It was just that the thought of completing on my house and handing over the keys whilst I hadn't received the money in my bank account causes me some anxiety. From googling, I've found I'm not alone in my paranoia, but should the worst happen, there are regulators who would step in. Yes, yes I know, more chance of winning the lottery etc.

Another concern was the point at which to commence a tenancy agreement. Obviously I wouldn't want to sign up to a rental agreement prior to being assured of the house sale, in case it all falls through and I'm tied into a rental. However I've discovered via searching this site and others, that rather than doing the exchange and complete on same day, to instead allow some time inbetween exchange and completion. Assuming I had a rental lined up (and all pre checks done etc) then I could sign the tenancy agreement as soon as contracts were exchanged on the house sale, then I'd have a week or so of overlap, where I could get my stuff moved in , safe in the knowledge that due to having exchanged contracts, the deal was almost certain to go ahead.

All hypothetical and of course I may struggle to sell my house or fail to achieve the price I'm looking for, but I know things sometimes move quickly and I like to get as clued up in advance as I can. If you think there's any other significant things I need to consider then please share.