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Protecting deposit between exchange and completion
Comments
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Umm, I think you mean "if I'm unable to complete the contract I voluntarily signed"So in a nutshell - I could face financial armageddon because of developer's overrunning on their build schedules causing their buyer's legitimate paperwork to expire. No strategies of mitigation then or am I entire at their mercy?
The contract says when completion is likely to be. It gives a long-stop, does it not, which is the last point at which you're bound to complete?
Having only one month for possible slippage within your mortgage offer seems... optimistic... So you haven't actually exchanged yet? Your mortgage offer will be a month into its six at that stage? And completion is four to five months away? So still fairly early build... Lots of things that can go wrong...0 -
That's a fairly extreme way of phrasing it but if you have entered into a contract, you are obliged to complete and if you don't the other party (the developer) will be able to claim any losses from you.
In practice, if it only causes a a sort delay those losses could be tiny and may not be claimed anyway.
Of course if there were a sudden housing crash or credit squeeze or you lost your job then it would get more serious.
If you think there is going to be a delay, speak with your lender and try and get an extension is the answer.
... and remember, it may never happen!
I appreciate that it's a big 'what if', and touch wood all will go through smoothly (I'm sure it will). It's just good however to have a plan B in the event of a worst case scenario.
How long are the extensions that banks give on a mortgage offer if required? If a few months, I would feel a bit better, but if they only extend by a few weeks then maybe not so much.0 -
The standard way of dealing with this type of situation is:
1) Have a long-stop date in the contract (you can walk away if the property isn't ready by the long-stop date).
2) Have a mortgage offer (before exchange) that doesn't expire until after the long-stop date.0 -
Umm, I think you mean "if I'm unable to complete the contract I voluntarily signed"
...signed on the basis that I had a valid mortgage offer at the time which due to builder incompetence has now expiredThe contract says when completion is likely to be. It gives a long-stop, does it not, which is the last point at which you're bound to complete?
Having only one month for possible slippage within your mortgage offer seems... optimistic... So you haven't actually exchanged yet? Your mortgage offer will be a month into its six at that stage? And completion is four to five months away? So still fairly early build... Lots of things that can go wrong...
Yes that's what got me thinking and hence me creating this thread. A 4 week margin seems very tight to me.0 -
The standard way of dealing with this type of situation is:
1) Have a long-stop date in the contract (you can walk away if the property isn't ready by the long-stop date).
2) Have a mortgage offer (before exchange) that doesn't expire until after the long-stop date.
I'll definitely look to have option 1 in place, I'll raise this with my solicitor.
Option 2 - I already have a mortgage offer so may be unable to edit expiry date retrospectively. Horse already bolted on this one?0 -
It will address it if the longstop date is the same as the expiry of your mortgage offer.This is helpful and I am aware of this, but this doesn't necessarily address the immediate issue of the mortgage expiring if there are significant build delays and exposing me to the risk of onerous penalties if I can't secure another lender.
In practice though, the reasons which would prevent you from getting another mortgage offer are likely to be those which would prevent you from completing anyway (losing job, etc).0 -
No, not necessarily "builder incompetence". There are MANY things outside the builder's control which could cause slippage....signed on the basis that I had a valid mortgage offer at the time which due to builder incompetence has now expired
And it's hardly the developer's fault you have no time contingency to allow for the long-stop in the contract you freely agreed to, is it?0 -
It will address it if the longstop date is the same as the expiry of your mortgage offer.
In practice though, the reasons which would prevent you from getting another mortgage offer are likely to be those which would prevent you from completing anyway (losing job, etc).
I think this is the solution - longstop date to match the mortgage expiry date. Exactly what I was looking for and I'll raise with my solicitor.0 -
No, not necessarily "builder incompetence". There are MANY things outside the builder's control which could cause slippage.
And it's hardly the developer's fault you have no time contingency to allow for the long-stop in the contract you freely agreed to, is it?
I take your point to a certain extent, but the developer has little to lose, whereas I have everything to lose. The developer can still sell the property or even increase the price to recoup any losses.0
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