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

Flugelhorn

Dogdog said:

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.

problem with a simultaneous is that if it is a major house move ie packing up everything and leaving to go somewhere else on one day and you don't actually know until mid morning or whatever that it is actually going to happen and no-one is going to change their mind / try it on for a last minute price cut etc etc . Having said that I haven't done one of those "one house to another moves" for 30 years, always bought the next house first since then. 

Tiglet2

I can't see that both solicitors will agree this.  There are too many third parties involved and until exchange takes place, nothing is set in stone.  The vast majority of solicitors will not give anyone a guarantee of completion by 31st March at this time, due to the amount of transactions they have on their books.  If completion takes place before 31st March, then you will benefit from the stamp duty deadline.  If completion is not possible by the end of March, then that would be the time to renegotiate the purchase price.  You seem to indicate that the sellers are using delaying tactics, but equally if the conveyancing work is not yet ready, then exchange cannot place anyway.

Your vendors may change their mind about going into rental - you say they are elderly, so I wonder why they would want to move twice?  Are they actually looking for somewhere to buy?  If they are intending to buy, they may want to add their purchase onto the chain so there is no rental in between selling and buying.

Chandler85

If you exchange on 1st March and complete on 29th March like I suggested, then where does completing in April come in?  I don't get it, if they fail to complete then they breach the contract and have to pay your costs, which ultimately would be the stamp duty, as that is an expense due to failing to complete.

It gives them the 4 weeks to find rented like they requested, you don't pay stamp duty.

Now you need the solicitors to explain why they cannot do the above, if you and the vendor want to.

caprikid1

"They wanted to speak again Friday.  I'm not easily intimidated, and it doesn't bother me "
 I think the poster was implying that you were being intimidating, I absolutely agree with them too. Moving is a very very stressful time and it feels like you are trying to bully them out of their home and bully them down in price. You may find they pull out if you continue to put too much pressure on . 

Irishpearce26

There is no way the sellers would agree to this unless they really want the sale to complete by end of March or have £10k spare. They have already reduced the house to cover additional work that needs to be carried out and now you want them to guarantee your stamp duty. If my buyer use this bullying and intimidating tactics and I had time I would be pulling out.

It sounds like they want an exchange to ensure they have a safeguard on their sale before putting a deposit on a rental property. If they are worried about loosing £1500 (guestimate) deposit they are very unlikely going to agree paying £10k if the sale doesn't complete in your timeframe.

SpiderLegs

I do find this a little odd.
The OP wants to safeguard against having to play SDLT. Ok that seems fair enough.
however, what if the vendor tells to OP they are not going to accept this clause?
is the OP then going to pull out and start again on another property where they end up having to pay SDLT?

It sounds like the OP is in a weak position (vendor going to rented) but wanting to make demands that are not really effective without shooting themselves in the foot. If I was in the vendor’s position I know what my response would be...

Irishpearce26

From your post you say you have exchanged/completed before which I can assume you are selling a house as well. Did you make much on the house you are selling? Will you have cash after the sale and if so would that cover the SDLT if you didn't complete in time? Maybe built a positive relationship with your vendors to accommodate their requests of exchanging early and having an agreed date before the end of March to complete and explain that if they cant complete by then you'll have to pull out.

Dogdog

Chandler85 said:

If you exchange on 1st March and complete on 29th March like I suggested, then where does completing in April come in?  I don't get it, if they fail to complete then they breach the contract and have to pay your costs, which ultimately would be the stamp duty, as that is an expense due to failing to complete.

It gives them the 4 weeks to find rented like they requested, you don't pay stamp duty.

Now you need the solicitors to explain why they cannot do the above, if you and the vendor want to.

Thanks.  So if they miss completion then as they have breached contract we can definitely claim the stamp duty from them in full as this is a clear expense due to failing complete?  So we don't need a clause as we are covered by default with the contract anyway?  

I wasn't clear on this, as I've been unable to find anything clarifying this online, in our contracts T&Cs, etc.  Current cliff edge stamp duty situation and a scenario like the one we are concerned about being a possibility doesn't seem to be particularly common/easy to find relevant other cases of!!

davidmcn

It's pretty rare for either party to breach the contract once they've exchanged - if they thought that likely, they wouldn't be exchanging. I very much doubt they're going to exchange with a secret plan to delay completion. If they have any serious doubts then they'll be delaying exchange.

Irishpearce26

I would get concrete confirmation from your solicitor on whether SDLT would constitute costs of breach of contract. SDLT is part of the sale and I would have thought costs are removal, storage, temporary rent, additional solicitors fees etc. If SDLT was payable on not completing by 31st March everyone would be scrambling to exchange to ensure they don't pay if they miss the deadline.