Vendors paying rent after completion

Chris24

I am about to buy a house that is part of a long chain. I currently rent.
I made clear from the beginning I would need to give 4 weeks notice to move out of the flat, so would need time after exchange for this. One week ago I was told there was a deadline for completion that most of the chain were unaware of - someone’s mortgage offer was going to expire in two weeks. So we needed to move fast.

Because of the 4 weeks notice I have to give, two of the vendors in the chain agreed to pay my rent payment for the month that would crossover, so that I wasn’t paying a mortgage payment and final rent payment in the same month. I just had to agree to complete by the deadline, which I agreed to. My solicitor said it would be written into the contracts that the money would be paid at completion.

My solicitor has now said (on the day we were meant to exchange) that it isn’t able to be written into the contract now because there is no time to send them back to the lenders to be approved.

They said that the money for the rent can be given to the estate agent at completion, then they will pass to me. I asked if this is legally binding and they said it is not.

I do not know what to do next with this. If the vendors do not make the payment I am not able to afford a rent payment and mortgage payment payment in the same month. Does anyone have any experience of this situation? I would be putting a lot of trust in the estate agent and vendors. I haven’t exchanged yet as I am unsure whether to do so.
Thanks

Onemanandtwolittleladies

No experience from me but only you can decide if it’s worth potentially collapsing the chain and losing out on the property you want to buy or risk not getting the rent payment back.

How much is it?

G_M

* Firstly, an overlap between renting and buying is common - it's just one more of the many costs associated with buying. If your contingency fund does not cover this, it suggests you are stretching your finances too thin. Find a cheaper propety?

* I'm amazed others in the chain have offered to pay your rent - very unusual. But no - the way suggested is not binding and you may never see that money.

* if the risk of that puts you off, then either
a) insist on a 4 week delay between Exchange and Completion and see what happens to the chain - the people who's mortgage offer expires can re-apply, or
b) walk away


edit: you could always ask those generous people in the chain to give you the money in advance. ie before Exchange. Who knows? Thy might be mad or desperate enough to agree (even though you could swan off with their dosh and back out of the purchase....)!

Tiglet2

It is actually quite handy to have an overlap - no stressing on the day, can move your furniture leisurely into the new property, or decorate before your removals arrive and you move in.

Overlaps happen all the time when purchasers move from rented to a purchase. You need to save enough money to cover rent and mortgage as a contingency as it is not legally binding and would not form part of the contract. I would also question your ability to manage your finances if you can't put aside a contingency fund for this situation.

Oh, and exchange happens when everything is ready. Solicitors don't talk about the day you were meant to exchange - there is no such thing - they only talk about setting a completion date. Exchange can happen any time before the completion date, whether it is 4 weeks before or the day of the completion date, but they will only exchange when all issues are resolved.

Your solicitor could have asked for an "allowance" to be taken out of the purchase monies but it sounds as though they haven't had enough time to be able to get everyone to agree. You could ask the Estate Agent to accommodate your request but the Estate Agent may not want to be involved in this.

Finchy2018

We had an overlap (because, make the most of what might be a one time thing when moving) but I also found (and this will be down to your lender) that we completed on the 4th of Feb and my first mortgage payment didn't leave until March. So I had the funds for both rent and mortgage ready for feb, but actually got another pay day before I made my first mortgage payment.

claire111

Ask the estate agents who presumably negotiated this deal, to persuade the rent to be paid to and held by your solicitor before exchange of contracts.

A couple of weeks rent at the bottom of a long chain is probably neither here nor there in monetary terms to the people near the top of the chain.... most reasonable vendors would go with that. Alternatively get the person whose mortgage offer is due to expire to ask for an extension.

eddddy

claire111 wrote: »

Ask the estate agents who presumably negotiated this deal, to persuade the rent to be paid to and held by your solicitor before exchange of contracts.

I'm not sure that the solicitor can get involved with this.

If the solicitor is involved, he/she may have to tell the mortgage lender, who would have to give consent.

That's why the solicitor is suggesting it's done informally, without the solicitor's involvement.

i.e. It's back to the same problem the OP mentioned at the outset:

Chris24 wrote: »

My solicitor has now said (on the day we were meant to exchange) that it isn’t able to be written into the contract now because there is no time to send them back to the lenders to be approved.

saajan_12

An overlap is to be expected and you should have budgeted for this. Houses have things break down and you only have yourself to fix it, so you need to be able to weather uneven costs in some months. However at this point, your options are:

Option 1) ask if they will pay the rent money at the same time as exchange

Option 2) take the risk and hope they pay upon completion, worst case youre down £1000? £2000?

Option 3) insist on 4 week gap or insist its written into the contract. Ultimately you'll have the same delay and the vendors may walk away if they are serious about their deadline.

Option 4) walk away. Find another house, meaning more solicitor / survey / mortgage costs.. almost certainly down £2000? £4000?

The seller may refuse No 1 and 3, in which case you're left with 2 or 4.. 4 has a larger cost thats more likely to happen, so I know I'd go with 2.

Jumblebumble

Is your solicitor not able to set up an unlinked transaction via one of his collegues whereby the rent is held by his firm in Escrow?

[Deleted User]

I agreed to do this for someone buying my house last time. It also wasnt in a contract, just agreed between agents and buyer/seller.
She just gave me her bank details and i transferred it in a few days after completion

Depends on if are willing to collapse the chain on this. I would just do it informally if i was in your shoes

davidmcn

Jumblebumble wrote: »

Is your solicitor not able to set up an unlinked transaction via one of his collegues whereby the rent is held by his firm in Escrow?

I can't see how anybody could transform this into an unlinked transaction. Why would somebody pay a complete stranger's rent, without something else being involved?

I think the solicitor already knows too much anyway, and ought to be reporting it to the lenders (assuming they're also acting for the lenders and that the sum is significant enough) whether or not they're handling the money.