Contract clause to reduce purchase price by stamp duty if sellers delay completion?

Dogdog

Advice greatly appreciated from anyone with legal knowledge of conveyancing and contracts!....
We are buying a property - freehold house.  Owners are elderly and selling up and moving in to rented accom.  Purchase agreed Mid October.  Last week, following continual delays by both our and their solicitors, we presented all evidence form surveys, enquiry responses (or lack of in most cases!) as reasoning why we needed to reduce offer price.  Negotiation ensured, and we agreed a new price on Friday, via the estate agent.  Our mortgage offer has been revised and re-issued already, and now we just need their solicitors to re-issue draft contracts (originals were received in November).  Nothing else should delay exchange and completion as far as I can see.

We had visited and met with the sellers some weeks ago and at that point they had asked about renting the property from us for a few weeks beyond the end of March should they need to if haven't found accom to rent yet and with Covid restrictions, etc.
This isn't something we can consider - and we have tradesmen on standby to com in as soon as completion occurs, with date of 24/03 made clear to them.

We spoke with them directly on Friday evening again by phone, following agreement of new price.  We had stated in new offer that we need exchange and completion to take place simultaneously on 24/03, or before.  They initially said that their solicitor has told them that this isn't possible, and that exchange needs to be 2-3 weeks before completion.  When I pressed as to why, and stated I've bought and sold a property in recent years with exchange and completion at the same time - they ended up saying that they need to safeguard themselves in case they pay a deposit and set up a tenancy somewhere - and then we were to try to drop our offer at the last minute or pull out entirely - leaving them liable for deposit and tenancy having not sold their property.    

I suggested this was fair enough, and said that we can probably work something out then - but I said that we don't have any safeguard should we exchange and then they delay completion beyond the end of March (stamp duty deadline) - because they haven't found anywhere to rent yet.  Obviously then as we have exchanged, we are in a legally binding contract and cannot pull out without losing their deposit.   They can delay completion for weeks - and the only compensation we will get is a miniscule amount per day (BOE base rate (0.1%) plus law society standard rate (4%), so 4.1% total of purchase price pro rata per day = under £50 per day!..........whereas we will have to pay in the region of £10k extra in stamp duty!!

My suggestion is that when my solicitor receives the new draft contracts, they add a clause that states exchange to occur ASAP - completion date of 24.03 set at latest - if this is delayed by any actions on the part of the sellers and their solicitors (and ultimately exchange does not occur by 31/03 at the latest - thus giving them a 5 working day "grace" or "buffer" then sale pauses - and automatically purchase price is reduced by the amount of stamp duty that then becomes due - meaning that we as buyers have the same outlay as the current agreed purchase price - with no stamp duty"

Is this viable / straightforward to do?  Is there any alternative way of ensuring we are safeguarded?  I thought about getting the percentage for compensation in the contract amended up from 4.1% to a huge percentage close to 1000% which would mean the full stamp duty amount is due to us on 1st April, and each day thereafter?

As far as I can see - sellers solicitor/sellers should have no reason no to accept clauses like one of the above - IF they actually do fully intend to complete as they have agreed on by 24/03???

AdrianC

You agree completion date as part of exchange. So simply exchange contracts with the price that you want, for the completion date that's agreed.

The seller renting the property from you would fall under Sale And Rent Back legislation, so is a showstopper.

davidmcn

Obviously it isn't "standard" by any means, but no reason in theory why you couldn't do this. But bear in mind you'd need to get any amended price agreed by your mortgage lender and an amended offer issued, so you'd need to cater for any delay that might cause (or the risk your lender decides not to issue an amended offer...).

Dogdog

AdrianC - thanks.  Understand cannot rent back above board.  They were asking "off the record" - but in any case - we cannot enable this.  It won't be happening, and we've been clear as such.
Even though completion date is agreed as part of exchange - what I'm getting at is....if completion date is then missed - my understanding is that we can only claim compensation from the sellers at the contract rate, per day, as I've stated.   But if completion doesn't occur until into April - we will pay out THOUSANDS more in stamp duty then we will get from them in "compensation".  They - in a roundabout way - get what they wanted........to "rent" back from us, in another guise.  I'm not saying this is their plan, and they seem nice people - but I'm just trying to cover all bases.   In my nature to think of all the angles!

davidmcn - thanks.  Cannot see amended (lower still than recent revision down) price being an issue with lender.  Was done on a quick call on Saturday and docs re-issued yesterday.  Would only be another similar downward amend - and so lessor lending and lessor deposit.

Suppose I'm wondering more, how viable it is - and how viable in the time frame with what seems to be 2 solicitors who've been poor in terms of comms and pace so far!??!

Thrugelmir

Why are you communicating directly with the vendors?  This should be handled through your solicitor and/or the EA. I certainly would feel very uncomfortable to be approached in such a manner. Sounds intimidating at the very least. 

Chandler85

If everything is ready (which is mustn't be, since you haven't yet), tell the solicitors you want to exchange on Monday 1st March and complete on 29th March, a full 4 weeks after exchange.  Gives them an easier time finding a rental, gives you peace of mind about the sale as well.

Flugelhorn

I think if I was your vendors I would back out now.  They aren't going to start committing to  a rental place until you have exchanged, we had the same last year - exchanged beginning March to complete end of April to enable rental property to be found - of course utter mayhem ensued in the intervening weeks but that is another story. Only ever did a sim exchange and completion when buying second of additional property, far too fraught otherwise. 

pbartlett

you can put what you like in the contract, including the seller paying stamp duty if completion does not occur by a certain date.

whether the vendor's solicitors will accept it is another matter.

Dogdog

Thrugelmir - they asked us about renting.  They wanted to speak again Friday.  I'm not easily intimidated, and it doesn't bother me - all I care about is completing the purchase before stamp duty deadline, and being protected financially from further outlay should they willfully choose to delay completion, or "accidentally" delay because they haven't found anywhere to rent.  Estate agents have been terribly slow and comms been awful.   It's too late to change them now.  Questions I have are is this possible and how viable/easy is it to action quickly?
Chandler85 - If we were to exchange and set completion on the dates you've stated.....and then completion not happen until in to April, what peace of mind would we then have?   We would have to pay stamp duty?  I don't follow??

Dogdog

Flugelhorn - I've exchanged and completed simultaneously twice myself.  Buying and selling.  I've asked around friends and family.  14 transactions.  6 were simultaneous.  Don't understand what you mean.
Fact is we could have happily exchanged and completed anytime from October.  They've known for 6 months they had a sale agreed - and that we were clear we would not pay stamp duty.  We had no chain form the outset having sold our last property and moved in to rented.

pbartlett - can you give me any reason at all why if the sellers are intending to go ahead with completion by 24/03 as they have agreed to that they wouldn't accept that contract clause?   I think it's us who should be pulling out if they don't??

pbartlett

not sure exactly what more advice you want.

yes you can exchange and yes they can delay completion resulting in you having to pay stamp duty. yes you can put something in the contract to protect you and no they dont have to accept it but they might. negotiate this via your solicitor.