Solicitor issue just before completion

SeaVixen

Hi all,

FTB waiting to complete, but I'm feeling like our solicitor is a little incompetent, and would really appreciate some more experienced eyes on the matter...

We sent our solicitors the following while waiting for quotes:
The survey has uncovered work that needs to take place on the property. My rough estimate is that the works will total about £5,000, but we are in the process of getting quotes. The seller has said (via EA) when we have the figure we can reduce the house price, or the seller will give us the money for the works at the point of completion.

The latter is quite attractive, as it would allow us to keep the same deposit, which is sitting just on the 75% LTV threshold. Dropping below this would change our interest rate. However, we have no knowledge of any other implications. Would it keep the formal house sale price the same, or would that be reduced accordingly? Would there be anything in writing to actually enforce the funds coming over to us? Are there any other implications we should be aware of?

We're currently scoping out the extent of the work/the necessary timeframe, to decide if we can afford to pay for it without altering the deposit. However, we'd appreciate your professional opinion on the alternate option in the interim.


The solicitor replied with:
We can ask for either price reduction or allowance on completion. In case of price reduction, your mortgage offer would need amending and obviously it will also affect the stamp duty.

We can ask for an allowance of £5000 on completion and that will not affect the stamp duty or the mortgage, but we will still need to report the allowance to your lender. The allowance would be deducted from the amount due from you on completion.



This was months ago - it took some time for builders to view and provide quotes. Quotes came to the expected £5k, seller confirmed they were happy to go ahead with an allowance. I signed the contract showing the £240k sale amount, transferred the 10% deposit, and were expecting to complete on Fri 7th.

Checked in with our lender to see if there was anything further we needed to do with them. They said £5k would exceed the maximum permitted allowance, so we need to reduce the house price. Contacted our solicitor about this, who confirmed it.

I feel very angry about this. Most of the work will have to be completed before we move in.
We have savings that can cover it, but because of the advice of the solicitor it is a rather large unexpected cost.

I feel like I don't trust this solicitor to get the process right anymore - Would anyone be changing solicitors at this point? Could I ask someone else in the company to review all the documents before we go forward to make sure everything else is correct and there haven't been any mistakes made that mess us up in the future?

Thoughts much appreciated!

davidmcn

The only error appears to be in giving you advice before checking the specific limit which your lender would have on any such allowance (it's going to vary from lender to lender), everything else sounds correct. Doesn't suggest to me they've got anything else wrong.

SeaVixen

davidmcn wrote: »

The only error appears to be in giving you advice before checking the specific limit which your lender would have on any such allowance (it's going to vary from lender to lender), everything else sounds correct. Doesn't suggest to me they've got anything else wrong.

Thanks David.

I might be responding harshly as we have made some decisions on the basis of that advice that we would probably have done differently otherwise. I had another question about the allowance, and she just reiterated the same advice, reassuring me that a £5k allowance wouldn't impact our mortgage at all.

I feel like getting us to sign the contracts while this was still in flux is a little problematic, and suggests she maybe didn't know that different lenders have different allowance limits. I asked if we have to redo the contracts, she said she would just amend them in pen.
I might be being pedantic, but I'd rather the contracts for my first house not have scribbles over them changing the figures.

There's been a few other little niggles through the process - like regularly referring to stamp duty even though we're FTB; not realising that altering our LTV has the potential to change our interest rate; and that when myself and the mortgage lender refer to the deposit we would be meaning the full amount that the buyer is putting into the house, rather than just the 10% deposit.

These are all little things of course, but not things that I feel I should be having to explain to my solicitor, so it's shook my confidence in them massively.

Am I overreacting?

Thrugelmir

SeaVixen wrote: »

This was months ago

Checked in with our lender to see if there was anything further we needed to do with them. They said £5k would exceed the maximum permitted allowance, so we need to reduce the house price. Contacted our solicitor about this, who confirmed it.

I feel very angry about this. Most of the work will have to be completed before we move in.
We have savings that can cover it, but because of the advice of the solicitor it is a rather large unexpected cost. As the solicitor also works for the lender.





Thoughts much appreciated!

I've highlighted the important fact. Lenders criteria can change overnight. Solicitor didn't provide advice. Simply relayed on what they were informed at the time.

SDLT_Geek

SeaVixen wrote: »

when myself and the mortgage lender refer to the deposit we would be meaning the full amount that the buyer is putting into the house, rather than just the 10% deposit.

"Deposit" is used to mean different things and people can end up talking at cross purposes because of using the word to mean different things.

The first meaning is the amount you pay to your seller (through the conveyancer) at exchange of contracts as an earnest for completion. The traditional contractual deposit is 10% of the price, but lower amounts can be negotiated. If the buyer is also selling, then all or part of the deposit might be "coming up the chain". Otherwise the buyer needs to find "real money" to give their conveyancer ready for handing on at exchange.

The word "deposit" can also be used in a looser sense as being the difference between the value of the house being bought and the amount being borrowed. I prefer to call it "equity" rather than a deposit. Lenders often look at what % equity a borrower is putting in so they can see what the loan to value ratio is when they assess the risk to them in lending money.