Entitled to any sort of compensation from solicitor?

adrian0508

Hello all,

We are after a bit of advice if anyone is able to offer it; my partner and I are currently in the process of purchasing our first flat and are told we are very close to exchange (just waiting on some final paperwork to arrive from management of the flats); we have had an incredibly difficult journey to get to this stage (partner is disabled so we have certain requirements, we are low income, I work zero hours contract) but with the help of family and a shared ownership charity we finally got to the stage where we found a place we loved and felt we could one day call home - we immediately put an offer in which was accepted.

Fast forward around 6 months to today, and the issue we are currently facing is to do with Help to Buy ISA eligibility and our solicitor this whole time leading us to think we were eligible and now telling us we are not. When we instructed our solicitor and ever since we have always made clear we are not using a mortgage and throughout the whole process we have kept our solicitor informed and even asked questions regarding the Help to Buy scheme and at no point did they indicate we were not eligible for the bonus and answered our questions as if we would be able to claim. Unfortunately today our solicitor has all of a sudden told us we would not be eligible for the bonus because we are not using a mortgage to purchase.

I understand that we probably have some responsibility for checking the Help to Buy scheme rules, however when we initially were starting this process (before solicitor even got involved) our plan was to get a mortgage (so at the point we checked the rules we thought we would be eligible), but unfortunately this didn't work out and our parents instead decided to help us out and get a loan (see part of our struggles with getting a mortgage here: https://forums.moneysavingexpert.com/discussion/6178685/aip-for-shared-ownership-on-benefits), and I guess we just forgot that that would mean we would no longer be eligible, which given how much there is to remember in a flat purchase I believe is fair enough for a first time buyer who isn't a conveyancer/solicitor and is just trying to get their head round the whole thing.

I feel that a solicitor should have more of a grasp of this (isn't it their job to act in our best interest and advise us of things like this?) and should have let us know straight away that we would not be eligible for the bonus, we've been asking questions about the bonus and how to claim it for 4 months now and they have waited until now to mention we aren't eligible.

We are now finding that we have just over £2,000 less towards the purchase than we thought we would have (we've been saving in our ISAs for a long time to prepare for this) and this is going to make our purchase a lot more difficult to afford; all of our surplus funds we were keeping for unplanned expenditure or extra furniture etc. are now gone and we are going to be on almost zero funds if the exchange and completion are soon (which is what the seller and we were hoping for).

We just wondered if there is anything that we could possibly do about this situation, are we entitled to any sort of compensation from our solicitor or anything? Are there ways around needing a mortgage in the scheme rules? - a stupid and annoying requirement given we wanted a mortgage but were turned away even though the whole thing is very affordable for us, and now would have even higher repayments on a loan that is still affordable for us.

Honestly, from day one it's felt like the government has been against us in every step of our journey to purchase a home, and I thought the government wanted people to own their homes, we will just be so happy when we finally have a home to call our own and all of this is over, so I really want this to work out.

Sorry if this post was a bit long, hopefully someone can let us know where we stand and if anything can be done. If not, we will just have to go for it with the funds we have and try our best to make do in the first few months.

Thanks,

Adrian.

[Deleted User]

No, there won't be any compensation in either direction.

You made a mistake in applying for something you didn't qualify for, but no one will seek compensation from you for it. You may need to pay the solicitor for time spent on your case, but no more than what was contractually agreed. Equally, the error won't earn you any compensation from them 

Just learn from the error and structure your next purchase accordingly.

adrian0508

Deleted_User said:

No, there won't be any compensation in either direction.

You made a mistake in applying for something you didn't qualify for, but no one will seek compensation from you for it. You may need to pay the solicitor for time spent on your case, but no more than what was contractually agreed. Equally, the error won't earn you any compensation from them 

Just learn from the error and structure your next purchase accordingly.

Just to clarify a few things: we have not applied for anything yet, our solicitor has simply failed to mention something until very close to exchange, and has despite being aware of our situation answered our questions as if we would be eligible until now. Apologies if it was not meant so but your final sentence sounds quite patronising to me. I am interested to hear your views further why you think this is okay and how we would learn from this error and structure our next purchase accordingly? Is it not the solicitors job to advise on things such as this? Hence why we questioned things constantly (we are first time buyers and needed advice from our solicitor).

If it helps, here is an example of a written communication we had 4 months ago:

With regards to your Help to Buy ISA, I will need to apply for the bonus at least one week before completion. In order to apply for the bonus I need a copy of the ISA closing letter from your bank, which includes details of your closing balance and account number. The bank may take around a week to produce this letter once you have closed the account and I would look to hold this letter before exchanging contracts in case there were any delays with this. I will keep you updated on the progress of the purchase if would like to close the account nearer to exchange.

This is not our only discussion about the ISA or bonus; the solicitor always knew we were not getting a mortgage, and was advising us on the bonus, I'm just quite angry that they only mention it 4 months later we are not eligible.

[Deleted User]

The final sentence means that we should learn from mistakes and approach future situations accordingly. Nothing to do with you or anyone else being patronising.

It's simply how we learn and develop and it's a logical approach to life. It's true for everyone.

dungabeagle

I understand being frustrated that you’re now shorter on money than you expected- but I wouldn’t say you’re “entitled” to compensation. 

Solicitors can charge a maximum of £50 to help a client redeem their help to buy ISA- so if this fee was quoted in your initial costs, then this shouldn’t be charged 
I also understand what you say about the solicitor not giving you the right information & that you trust them to guide you- but there has to be a level of self accountability, the eligibility criteria for using a HTB ISA are not complicated & are clearly posted on government sites as well as on individual providers website, it’s not feasible for a solicitor to explain every last part of the process to every client, there has to be a base level of understanding/willingness to seek education yourself. 

It’s possible the email was a stock response they use and they didn’t realise at the time that your specific circumstance would mean that response didn’t “fit”

If you do feel like you want to complain then you are of course welcome to do so! And maybe they would be willing to provide some compensation- but I think realistically it’s not a certainty that they will give you any money at all for what you have described. 

Tiglet2

Sorry to hear this but I have to agree with dungabeagle. 

Our solicitor this whole time leading us to think we were eligible and now telling us we are not. 
You opened the account with the intention of benefiting from the bonus scheme when you came to purchase a property.  You should have read the terms and conditions and understood the limitations of the scheme.  This would have been your responsibility.  As said above, the rules for the scheme would have been readily available and very likely given to you when you opened the account. 

I understand that we probably have some responsibility for checking the Help to Buy scheme rules, however when we initially were starting this process (before solicitor even got involved) our plan was to get a mortgage (so at the point we checked the rules we thought we would be eligible)
So, you did check the rules?  You should have known that you were not eligible without a mortgage being needed.

I guess we just forgot that that would mean we would no longer be eligible
Hmmmm, an error on your part.

I feel that a solicitor should have more of a grasp of this (isn't it their job to act in our best interest and advise us of things like this?) and should have let us know straight away that we would not be eligible for the bonus, we've been asking questions about the bonus and how to claim it for 4 months now and they have waited until now to mention we aren't eligible.
They have advised you.  They wouldn't be looking at your HTB ISA at the beginning of the process, but it's come to light now.  Most clients using a HTB ISA would need a mortgage.  It's likely they haven't come across someone wanting to use this scheme who doesn't need a mortgage.  You haven't exchanged therefore no binding contract.

are we entitled to any sort of compensation from our solicitor or anything? 
No, as dungabeagle says above, there has to be a level of self-responsibility.  It’s not possible for a solicitor to explain every single part of the process to every client, there has to be a base level of understanding and responsibility.  You admit you checked the rules, but forgot about the eligibility criteria and now you're trying to pass the buck.

The solicitor is paid to transfer the legal ownership of a property from one party to another.  They will do their due diligence in making enquiries and reviewing all the paperwork and reporting to you on their findings.  But that includes sometimes finding out things that you don't like or agree with.  As long as they report their findings to you before exchange takes place, as they have done here, you cannot expect compensation for something you should have been aware of at the point at which you knew you couldn't get the mortgage.

With regards to your Help to Buy ISA, I will need to apply for the bonus at least one week before completion. In order to apply for the bonus I need a copy of the ISA closing letter from your bank, which includes details of your closing balance and account number. The bank may take around a week to produce this letter once you have closed the account and I would look to hold this letter before exchanging contracts in case there were any delays with this. I will keep you updated on the progress of the purchase if would like to close the account nearer to exchange.
A generic paragraph sent to all clients with a HTB ISA.  Most likely sent during the initial part of the process and before the file was properly reviewed for exchange.

Sorry.

gozaimasu

GET A MORTGAGE.

This is the only way you'll get the bonus. I assume that your bonus will more than cover the cost of interest for your fixed term deal. You can overpay the mortgage during that term to (usually) 10% of the value of the mortage then after that you can pay it off in full. Surprised you didn't think of that already.

gozaimasu

Get a mortgage asap which will unfortunately delay the process until you get one. Make sure that you don't exchange until you've got the mortgage and that your figures work out to cover it.

[Deleted User]

gozaimasu said:

GET A MORTGAGE.

This is the only way you'll get the bonus. I assume that your bonus will more than cover the cost of interest for your fixed term deal. You can overpay the mortgage during that term to (usually) 10% of the value of the mortage then after that you can pay it off in full. Surprised you didn't think of that already.

If you bothered to read the link the OP posted - they CANNOT get a mortgage as they are in a catch 22 position of having income streams ( mainly benefit ) that will not be taken into account by mortgage companies that offer shared ownership mortgages and part of their potential income ( the benefit claim towards the rental element ) doesnt materialise until they are actually paying rent. 

OP - I hugely sympathise as my son is in a partly similar situation for shared ownership application. 

Regarding the “claim” against the solicitor as pointed out its a non starter but Id still put in a complaint and see if they offer you something 

MovingForwards

Lodge a complaint, but don't expect £2k.
One of the terms of the bonus was getting a mortgage, you should have been aware no mortgage means no bonus and reminded your solicitor whenever they referred to it.

The situation you are in now is the same as many low income people buying a home, trying to spread out what little money will be left to get furniture.
Ask friends and family if they have anything spare, put adverts up on Facebook and look at ads on FB, gumtree and other local selling sites. Check BHF and other furniture charity shops. Just get basics for now a bed, sofa or arm chairs and the rest you can get in time.

I know how hard it is getting the right place suitable for disabilities. You can get over this hurdle.

adrian0508

Thanks for all your replies, to be honest I wasn't expecting I would be entitled to compensation, I was just angry and wanted to see peoples thoughts on where I stood.

Tiglet2 said:

Sorry to hear this but I have to agree with dungabeagle. 

Our solicitor this whole time leading us to think we were eligible and now telling us we are not. 
You opened the account with the intention of benefiting from the bonus scheme when you came to purchase a property.  You should have read the terms and conditions and understood the limitations of the scheme.  This would have been your responsibility.  As said above, the rules for the scheme would have been readily available and very likely given to you when you opened the account. 

I understand that we probably have some responsibility for checking the Help to Buy scheme rules, however when we initially were starting this process (before solicitor even got involved) our plan was to get a mortgage (so at the point we checked the rules we thought we would be eligible)
So, you did check the rules?  You should have known that you were not eligible without a mortgage being needed.

These are quite interesting points as to be completely honest I don't remember whether I remember reading about needing a mortgage or not (it was over 2 years ago since we opened our Help to Buy ISAs), I definitely would have checked the eligibility criteria at the time and decided that with everything we intended to do we would be eligible, but even when I look at certain websites now (including banks and advice websites), they don't all mention that you need a mortgage to be eligible; many of them them say "you do not have to have a help to buy mortgage to be eligible, any mortgage will do" but that is all they say about a mortgage, so I think that could still be open to interpretation, and many site I see do not mention the mortgage requirement at all.

Regardless, I see that there is probably nothing I can do about the situation and we will just have to proceed as we are, we will just be happy to finally have our own place, we're pretty used to all the roadblocks being put in our way by now and appreciate that all these government schemes exist, they just unfortunately haven't been good enough to fit our unique situation and I feel they could do better if they were more flexible.

I don't think I will bother complaining, I don't want it to affect the progress of the purchase or the solicitors motivation, and it's unlikely anything would come from it anyway.

Thanks to everyone for your help and advice!