Seller restrictions

System

Thanks Davidmcn. This is what I don’t understand though, how does it do that?

They have sold it undervalue you see. And for me to re sell it on within the four month period, I simply need to ask their permission and complete a form. In my mind that renders the restriction useless. Why have it at all if consent to re sell will be given if asked for within the four months!?

System

Any ideas on how this restriction is advantageous to the seller?

G_M

borkid wrote: »

I might be a bit dumb here but how can you be buying for cash if you need a mortgage?

Don't worry - you're not alone.I'm as dumb as you!

Any ideas on how this restriction is advantageous to the seller?

My guess is that it ensures that the lender is informed both of the sale, and the sale price. If the sale price is significantly higher than the price they achieved in the auction, they can look at whether significant improvements have ben made to justify the higher price, or whether they might have a problem by having sold at below market value (in which case the original owner might have a claim against them).

System

Thanks G_M

I wonder why I would then need their consent to sell within the four months? If they do not consent and I sell after the restriction is removed (more likely anyway), the sale price or valuation is the same, so the original owner’s claim is the same, but the lender won’t have been notified.

To clarify:

1. Buy cash
2. Renovate
3. Sell/ remortgage several months later

edgex

All that says is that you, as a new owner/seller, have to have notified ME of any sale onwards within the 4 months of you buying it.
It doesn't block the sale or rental of the property.

I assume, as it's Mortgage Express, that it's a repo property. All they're doing is ensuring that they have clear records that their sale isn't iffy in any way.
(eg. a connected party to ME gets a 'friend' to buy it cheaply at auction, & then buys it from them)

System

Thanks edgex, that makes sense. Yes, it is a repo.

Somewhere, the word “consent” has crept into communications between my solicitor and the seller’s solicitor, and my solicitor and me.

This made me believe the seller could deny consent and not provide the certificate stated in clause 12.3 above.

Clause 12.2 however does not mention gaining consent, merely providing notification.

Two very different words with very different meanings.

I can only believe that as long as I provide notification, the seller will provide the certificate and I can sell it, and that “consent” is really the wrong word......

Your reasons as to how this affords protection to the seller make a lot of sense, thanks again.

G_M

ritfor wrote: »

Thanks edgex, that makes sense. Yes, it is a repo.
.

Bear in mind that where a property has been repossessed by a lender, it is because the original owner/borrower owes the lender money - almost always more than the value of the property.

When the property is repossessed and sold at auction, the sale price pays off part of the borrower's debt, but the outstanding amount is still owed, and the lender may well continue to pursue the borrower for this outstanding amount.

So if the property were sold at a price below that which the debtor believes it could have achieved, he may accuse the lender of selling too cheaply and thereby leaving him with more debt than would have been the case if it was sold for more.

That is why banks either sell repos at auction, where they can show they sold to the highest bidder at the best price, or they sell via an estate agent but continue to market the property even after agreeing a sale, right up to Exchange of Contracts.

Indeed, they usually then place ads in local papers saying they have accepted an offer of £X for xxx property, and invite higher offers (much to the annoyance of the buyer!). In that way, if challanged, they can say they took all reasonable steps to get the highest price possible.

System

This is becoming much clearer. I have been informed that a form will be provided to me upon completion. The form is to be completed in the event I wish to sell the property within the four months. It is to be submitted to the seller to notify them of my intent, and for them to use to issue the certificate to me. The form asks for details of works done to the property and approximate costs of the works etc., in addition to the sale price.

So this would strengthen the original sellers position on why they sold the property at a lower value.

I would suggest it is even beneficial to the original seller that I do sell on within four months, as if it is after this time and the restriction has been removed, they would not have this extra information and would be more exposed if a challenge came from the original debtor. Although I expect they have a contractual agreement somewhere with the original debtor that any challenge must be presented within four months of sale. As if I were the original debtor and I discovered an inflated sale price say 12 months later, I would still be furious my repossessed home had been sold under market value.

So the restriction is a way of the seller getting the information they need in case they need to defend themselves.

I sincerely hope my summation is correct!

AdrianC

ritfor wrote: »

Seller’s solicitors have a restriction whereby the purchaser cannot sell/ remortgage the property for minimum four months.

I understand why

Utterly ridiculous. The only reason for it is for an overage clause - which is just greed on their part.

They're obviously selling un-improved on the assumption that the improvements won't be profitable - but they want to have a slice of your profit if it turns out they're wrong. So, no, they won't lift it lightly. The only way they'll agree to lift it within the four months is if you're wrong about it being profitable, or if you pay them a cut.

System

eeerrrrrrrr really.........do you have experience or examples of this?

Nothing remotely like this in any documentation, nothing raised by solicitors, no mention of an “overage” clause, no talk of paying them out.

Be interested to know your basis for these comments.