Management company buying our house

mai_taylor

We were due to exchange on our sale and purchase today but have been told the council who are buying our property won't be having a board meeting until Tuesday so they can't sign off on exchanging until then. That would be OK but they won't have the deposit funds available until Wednesday. Solicitor said we can exchange Tuesday but if they backed out for any reason we would only get 10% deposit and would have to find another £26500 for our purchase. She said they are very unlikely to back out but she needed to make us aware. Now obviously we don't have a spare £26500 hanging around if this were to happen. OH's opinion is it's a tiny risk and we should just do it but I think this is crazy. Is this normal? We were originally supposed to complete on the 10th December now it should be the 14th December but they will only complete on Friday so if the 14th doesn't happen then looks like we won't be in before Christmas which our sellers will not be happy about.

AdrianC

The £26,500 is - I guess - the equity you'll have left once the mortgage is paid off from the sale? Never mind that... If you don't complete on your sale, will your lender even give you a second mortgage?

Breaking the chain is all well and good, but can you actually afford to own two properties simultaneously? What happens if you don't find another buyer for six months?


Today's Thursday. Tuesday is three business days away, Wednesday is four. That's it. Your seller's not going to run away from the deal for the sake of a few days.

mai_taylor

AdrianC wrote: »

The £26,500 is - I guess - the equity you'll have left once the mortgage is paid off from the sale? Never mind that... If you don't complete on your sale, will your lender even give you a second mortgage?

Breaking the chain is all well and good, but can you actually afford to own two properties simultaneously? What happens if you don't find another buyer for six months?


Today's Thursday. Tuesday is three business days away, Wednesday is four. That's it. Your seller's not going to run away from the deal for the sake of a few days.

The £26500 is the deposit we'll be liable for on our purchase. We couldn't afford the new property if our buyers were to pull out so they would either have to wait for us to find a new buyer or we'd owe them £26500. The only other option they've given us is to complete and exchange next Friday.

AdrianC

mai_taylor wrote: »

We couldn't afford the new property if our buyers were to pull out so they would either have to wait for us to find a new buyer or we'd owe them £26500.

Don't forget that exchanging sets the completion date, and makes you contractually liable for any costs arising from your failure to complete...

It could get VERY expensive if your buyer decides not to.

hazyjo

Would not dream of exchanging on a purchase before a sale :eek: Massive risk - not 'tiny'. Not sure why your solicitor is underplaying it.

ThePants999

Do NOT exchange on your purchase before your sale.

mai_taylor

We're not exchanging on purchase before sale we're exchanging both on the same day but our buyers won't have the funds until the next day. The solicitor has now said this isn't an issue and it would be the same problem if the buyers were to back out of the sale after exchange. We'd still owe the sellers the deposit.

hazyjo

Ah. That's different then.

mai_taylor

hazyjo wrote: »

Ah. That's different then.

Does this sound OK then. Basically if they pull out after exchange we'd be in the same position so I wasn't really sure why the solicitor was pointing it out to us. We still have to wait for the sellers to agree to exchange without us having the deposit from our buyers.

ThePants999

It sounds PROBABLY OK now.

When you exchange contracts on a purchase, you take on an immediate liability that is usually 10% of the purchase price. Should you pull out of the contract, you owe that much to the vendor. It is also customary to immediately pay that amount, and therefore only pay the remaining 90% on completion - however, it is also quite common to pay less than this at exchange. E.g. if person A is buying for £200K from person B, and person B is buying for £250K from person C, person A will generally pay the £20K deposit on exchange to person B, but person B will typically agree with person C to just pass that £20K along rather than faff about adding an extra £5K on top. If person B pulled out of buying from person C, however, they'd still owe that extra £5K.

So, your potential issues are twofold. Firstly, you need to either agree with your own vendor's solicitors that your deposit money will ALSO be late, or you need to stump up the entire amount yourself for a day before your buyer repays you. Secondly, in the incredibly unlikely event that your buyer pulls out after exchange but before paying you the deposit, you'll then have to sue them for it rather than having it safely in your hands already.