Delayed completion nightmare

tbaile

Hi
We were due to complete yesterday (Monday) two weeks after exchange - in a chain of 4 transactions. At 11.30am the solicitor told us that the person at the bottom of the chain didn't have the funds. He (via a company he set up) exchanged contracts before he had his loan fully approved. The loan was only approved last Friday and his solicitor requested funds then, but the loan company needed 4 days to "draw down" funds. Given that we only found this out on the day at 11.30am everyone's houses were fully packed. So everyone had to rearrange removals and now has to stay in empty houses until Thursday. The guy's solicitor said in an email yesterday to the other solicitors that it's not his fault because he advised his client of the risk of exchanging without the loan fully approved.  He didn't explain why he didn't tell the other solicitors last Friday to avoid all the hassle and costs. I think that the average additional cost per family is around £1.5k - removals and storage.

Anyway - if and when we all move on Thursday, does anyone know the best way to reclaim the additional costs from the guy at the bottom? I've read that each party can only claim from the person below them - and the costs accumulate down the chain; but given that we all now know each other in the chain, can we all agree our total costs and get the people who have the contract with him to make their small claim first; and then if that claim is successful we can then get the money back up through the chain (without needing to go to small claims). Does the fact that the purchase was through the guy's company make it easier or harder to claim?

Also - is the solicitor allowed to just wash his hands of this? Is he allowed to exchange before seeing evidence that everything is in place?

Grateful for any advice!

davidmcn

tbaile said:

Also - is the solicitor allowed to just wash his hands of this? Is he allowed to exchange before seeing evidence that everything is in place?

Yes, the contracts are between the clients and it's them who take any risks. The only professional obligation I guess the solicitor would have is not to exchange if they know completion can't take place as anticipated.

saajan_12

tbaile said:

Hi
We were due to complete yesterday (Monday) two weeks after exchange - in a chain of 4 transactions. At 11.30am the solicitor told us that the person at the bottom of the chain didn't have the funds. He (via a company he set up) exchanged contracts before he had his loan fully approved.- oh dear. Your claim would be on the company then.. does it have the funds for everyones costs? 
 The loan was only approved last Friday and his solicitor requested funds then, but the loan company needed 4 days to "draw down" funds. Given that we only found this out on the day at 11.30am everyone's houses were fully packed. So everyone had to rearrange removals and now has to stay in empty houses until Thursday.
The guy's solicitor said in an email yesterday to the other solicitors that it's not his fault because he advised his client of the risk of exchanging without the loan fully approved.  He didn't explain why he didn't tell the other solicitors last Friday to avoid all the hassle and costs. I think that the average additional cost per family is around £1.5k - removals and storage. - annoying, but that is between the bottom solicitor and their client. 

Anyway - if and when we all move on Thursday, does anyone know the best way to reclaim the additional costs from the guy at the bottom? I've read that each party can only claim from the person below them - and the costs accumulate down the chain; but given that we all now know each other in the chain, can we all agree our total costs and get the people who have the contract with him to make their small claim first; and then if that claim is successful we can then get the money back up through the chain (without needing to go to small claims). - Legally you can only sue & win against the person who you had a contract with. Outside court, you can mutually agree with the rest of the chain that the guy at the bottom each pays you £X and no one will sue. But if you can't agree, then your only court case is against your buyer. The sequence would be the other way - the person at the top (A) claims their personal expenses from their buyer (B). Then B claims their own + A's expenses from their buyer (C). Then C claims their own + A's + Bs expenses from their buyer (D) who is the problem guy. If C claimed first, they don't know the size of their claim which include A and B's costs. 
Does the fact that the purchase was through the guy's company make it easier or harder to claim?
-generally harder, depending on how solvent the company is and how many assets it has. If its a new company, then it'll likely only have the house, so it may end up as a charge on the property if they don't pay up. 
Also - is the solicitor allowed to just wash his hands of this? Is he allowed to exchange before seeing evidence that everything is in place? - who's solicitor? Your claim would only be between the buyers and sellers. The solicitor's client can complain about their solicitor. 

Grateful for any advice!

First things first, get your completion notice out and wait for completion so your costs are known. 

Then you can try getting an agreement between the parties to settle at the bottom guy paying each person  £X in costs in return for everyone agreeing to settle with no further action. You'd need to check with your solicitor whether this is something they can entertain and make sure the whole chain agrees. 

If not, then you're left claiming from your buyer. You need to wait to receive the claims from the chain above you, and then include that plus your costs to claim from your buyer. You need to be concerned by the solvency of your buyer as they would need to pay you and then claim down the chain. The person buying from the bottom guy is the one claiming from the company - their solicitor hopefully advised them of the potential risk in claiming from a (limited?) company should anything go wrong..