HELP! 5% deposit incentive on a mortgage, Do I have to pay the builder back?

l3b087

Me and my wife have just bought our first home and the builder of the property gave us a 5% builders incentive towards the mortgage. The builder is now asking for the 5% to be paid back as a loan. Is this acceptable? Do we legally have to pay this back? He is now threatening to take us to court. we really need some advice. Thanks

ACG

@kingstreet is probably the man to answer this question but I suppose the big question is - what did you sign?
Ask the builder to provide paperwork that confirms the incentive was a loan as you were under the impression it was an incentive. 
I cant see how this could be a loan personally as 99% of lenders would not have accepted a loan as a form of deposit. 

l3b087

Thank you for your swift reply.
When we purchased the property we was under the impression that is was a builders incentive and since buying the property he has now changed his mind and is asking us to sign a contract with him to pay the money back. we do not have his kind of money its unbelievable. 

kingstreet

If the reservation, the UK Finance Disclosure Of Incentives Form and the contract describe it as a gift, it's a gift. If you have committed to anything else, that's different. Ask the conveyancer who handled the purchase, as they will have given certain guarantees to your lender.

NewShadow

If you haven't signed an agreement saying it was a loan - and if none of your correspondence in advance of the purchase gave any indication it was ever intended to be a loan - then he's going to really struggle if he decides to take this to court...

Do not sign anything now or give any indication verbally or in writing that it might be a loan or that you might be willing to repay. 

On the other hand - do you have anything in writing confirming it was an incentive? I would assume your lender/solicitor would have wanted something in writing as part of the due diligence - if so, I'd suggest you respond to the builder as advised by ACG, including this paperwork/reference to the paperwork to discourage a drawn-out 'he-said/she-said' response. 

l3b087

Thank you to both of you for the reply.
As agreed with our solicitor this was nothing more than a builder incentive he agreed to pay 5% of the deposit and this is in writing on our final contract. Will this be enough? As he does want us to sign a contract that he has mocked up but so far we have told him we are not going to sign it. But he will not leave me or my wife alone and he texts and calls us on a daily basis asking for the money. 

We just want to get him out of our live as he will not stop harassing us.

If this was to get drawn out and we was to go to court would the mortgage contract be enough?

ACG

Dont sign the contract, ask him to send it to your solicitor, if the answer is anything other than ok - that probably tells you everything. 

If you go to court and lose, worst case scenario is that you would end up being liable for the debt. It is not like you would get locked up or anything, so the threat of court is probably nothing more than a threat and nothing to worry about until the court paperwork lands on your door mat. 

It might also be worth calling the police (on 101) to get advice on the harassment and what you should do in terms of recording it or sending to him. 

DCFC79

l3b087 said:

Thank you to both of you for the reply.
As agreed with our solicitor this was nothing more than a builder incentive he agreed to pay 5% of the deposit and this is in writing on our final contract. Will this be enough? As he does want us to sign a contract that he has mocked up but so far we have told him we are not going to sign it. But he will not leave me or my wife alone and he texts and calls us on a daily basis asking for the money. 

We just want to get him out of our live as he will not stop harassing us.

If this was to get drawn out and we was to go to court would the mortgage contract be enough?

What else do you have ?
Have you spoken to the conveyancer ?
The mortgage contract could be enough, if you could get something else to back uo your case it wouldn't hurt.

l3b087

We have yet to speak to our solicitor. I think this will be the next step but before I did I wanted to know whether we would liable to pay it back. just for piece of mind really and to get him off our case. I will speak to my solicitor tomorrow and hopefully be able to get something in writing.

NewShadow

l3b087 said:

We have yet to speak to our solicitor. I think this will be the next step but before I did I wanted to know whether we would liable to pay it back. just for piece of mind really and to get him off our case. I will speak to my solicitor tomorrow and hopefully be able to get something in writing.

Before speaking to your solicitor - and possibly incurring costs - I would suggest a response to the builder along the lines of:

Dear Mr X, 

As part of the conveyancing process for our property you offered us a 5% incentive to complete; you have since asked us to sign a contract to convert this incentive into a loan. 

We have been advised that we have no legal obligation to do as you have requested. We have further been advised that such a request on your part may constitute mortgage fraud, as you are likely aware our lender would not have accepted 5% of our deposit being in the form of a repayable loan. 

In the last X weeks you have contacted us in excess of X times, despite repeated requests to cease. This letter serves as notice that we will consider any further direct contact to ourselves regarding this matter to constitute harassment. Any further attempts at contact will be reported to 101 and may result in legal action being taken under the Protection from Harassment Act 1997. 

Given the above, and given we have repeatedly made it clear that we will not be signing the papers you have forwarded, please address any further correspondence you consider necessary to our solicitors at: 
xxxx
xxxx
xxxx

Sincerely, 
@l3b087 

Not sure if anyone with experience here can confirm? - I'm fairly sure the mortgage fraud thing is blowing smoke but it's at least plausible... 

Might be enough to scare him off - and if not then it'll work as a 'letter before action' to show you tried to be reasonable. 

l3b087

NewShadow said:

l3b087 said:

We have yet to speak to our solicitor. I think this will be the next step but before I did I wanted to know whether we would liable to pay it back. just for piece of mind really and to get him off our case. I will speak to my solicitor tomorrow and hopefully be able to get something in writing.

Before speaking to your solicitor - and possibly incurring costs - I would suggest a response to the builder along the lines of:

Dear Mr X, 

As part of the conveyancing process for our property you offered us a 5% incentive to complete; you have since asked us to sign a contract to convert this incentive into a loan. 

We have been advised that we have no legal obligation to do as you have requested. We have further been advised that such a request on your part may constitute mortgage fraud, as you are likely aware our lender would not have accepted 5% of our deposit being in the form of a repayable loan. 

In the last X weeks you have contacted us in excess of X times, despite repeated requests to cease. This letter serves as notice that we will consider any further direct contact to ourselves regarding this matter to constitute harassment. Any further attempts at contact will be reported to 101 and may result in legal action being taken under the Protection from Harassment Act 1997. 

Given the above, and given we have repeatedly made it clear that we will not be signing the papers you have forwarded, please address any further correspondence you consider necessary to our solicitors at: 
xxxx
xxxx
xxxx

Sincerely, 
@l3b087 

Not sure if anyone with experience here can confirm? - I'm fairly sure the mortgage fraud thing is blowing smoke but it's at least plausible... 

Might be enough to scare him off - and if not then it'll work as a 'letter before action' to show you tried to be reasonable. 

This is great thank you for taking your time to draft this.

I will certainly use something like this and will keep you guys posted.

I am starting to feel a little hope now but we will see he is very consistent but in the eyes of the law I feel this is financial fraud and I need to fight it.