Advice needed: negative equity on sale

JWTP

Hi all,

So we are currently in the process of buying our first home and so far so good - all has gone smoothly. We have completed most of our searches (through a conveyencer), the survey is done, mortgage agreed and confirmed.

However, our solicitor has flagged the following to our attention...

'14.3 Does the sale price exceed the amount necessary to repay all mortgages and charges secured on the property' -- to which the answer was no

Our solicitor has queried the sellers solicitor and they have stated they are awaiting a 'redemption statement'

From what I can tell this means the seller is in negative equity and owes more than we have agreed?

I suppose my question really is where does this leave us? I understand the seller may have simply misunderstood the question and therefore answered incorrectly, but on the basis of her being correct, is it possible that this could potentially be game over for us? Or else risk significant delay? Is there anything we need to be asking or preparing for at this point?

Any advice would be greatly appreciated - Thanks in advance!

Princessladonna

We are currently selling our property and this came up as a question from our buyers solicitor. Our solicitor advised us not to answer this question as he would do it for us.

Have you been onto right move to look at the property history the previous sold price etc?

BoGoF

If it is not a mistake and they cannot clear the mortgage from the sale proceeds their mortgage company will not release their security on the property.

The question is badly worded though, the sale proceeds may not exceed the amounts but could be (unlikely) exactly the amount to clear it. Surely the wouldn't have accepted an offer below their outstanding mortgage?

davidmcn

BoGoF wrote: »

If it is not a mistake and they cannot clear the mortgage from the sale proceeds their mortgage company will not release their security on the property.

The question is badly worded though, the sale proceeds may not exceed the amounts but could be (unlikely) exactly the amount to clear it. Surely the wouldn't have accepted an offer below their outstanding mortgage?

It's also possible to sell in negative equity provided the lender agrees to turn the shortfall into an unsecured loan. It's a bit of a daft enquiry really - either your solicitor gets an acceptable undertaking from the sellers' solicitor to discharge any charges over the property, or they don't (in which case you can't complete the transaction). What arrangements they come to in order to get the discharges isn't really your business.

foxy-stoat

Assuming your estate agent have seen a mortgage offer from the buyers, so they can see that they have the funds set up.

They might be in negative equity but may also be making up the shortfall when they sell.