Completion on Notice Long Delay

JSheffield

Hi all

We are in the process of buying our first home and are experiencing lengthy delays after exchanging contracts to complete on notice almost six months ago.

From the top - July 2021 - current occupants have part exchanged the house for a new build which was not yet ready, so technically we are purchasing the house from the developers.

The current occupants were expecting their home to be built and ready for occupancy by early September, a while but we were happy to wait. We were informed in the week running up to exchanging contracts that completion would be on notice, which our solicitors explained meant there was no set date we would complete. Again, we were happy to wait. We then exchanged late-July, and the very next day we were informed by the developers solicitors that the home would not be ready until late-September (with no reason provided). At the time the "pingdemic" and supply shortages were common so we had an inkling it could be due to this. 

Towards the end of September we were informed by the current occupants it had been pushed back to the end of November. We have now been told the middle of December. Our current mortgage offer expires at the end of November and myself and the OH are concerned that the purchase may fall through and we would stand to lose our hard earned deposit and have to fork out more legal fees. We can extend our mortgage offer for 3 months but the home has to be revalued and we are frantically trying to get this done. Our mortgage broker has said he has never known anything like this in his career.

We understand the naivety on exchanging on notice without inserting a back date, but we weren't really made aware of our options by our solicitors at the time. We are  hoping the developers will get a fright from knowing our mortgage offer runs out soon and to temporarily accommodate the current occupants but we are really clutching at straws. Our solicitors have pretty much told us we don't have a legal leg to stand on. 

This whole situation has left a really sour taste in our mouths, but we just want to get into our first home. Has anyone has experienced anything similar? Any advice or tips would be greatly appreciated. 

Thank you.

macman

Your conveyancer is correct: you don't have any comebacks in this situation once you agreed to exchange without a fixed date.

saajan_12

JSheffield said:

Hi all

We are in the process of buying our first home and are experiencing lengthy delays after exchanging contracts to complete on notice almost six months ago.

From the top - July 2021 - current occupants have part exchanged the house for a new build which was not yet ready, so technically we are purchasing the house from the developers.

The current occupants were expecting their home to be built and ready for occupancy by early September, a while but we were happy to wait. We were informed in the week running up to exchanging contracts that completion would be on notice, which our solicitors explained meant there was no set date we would complete. Again, we were happy to wait. We then exchanged late-July, and the very next day we were informed by the developers solicitors that the home would not be ready until late-September (with no reason provided). At the time the "pingdemic" and supply shortages were common so we had an inkling it could be due to this. - if you exchanged, what was the "long stop date" agreed - ie the date after which you can walk away if they don't complete by then. It could be any time upto then. 

Towards the end of September we were informed by the current occupants it had been pushed back to the end of November. We have now been told the middle of December. - a 3 month delay is par for course on a new build.. Our current mortgage offer expires at the end of November and myself and the OH are concerned that the purchase may fall through and we would stand to lose our hard earned deposit and have to fork out more legal fees. We can extend our mortgage offer for 3 months but the home has to be revalued and we are frantically trying to get this done. - well hopefully you insisted on the long stop date to the your mortgage offer expiry date, or were very certain it would be extended. Our mortgage broker has said he has never known anything like this in his career. - maybe he's inexperienced in new builds, where completion on notice is more common? But no, nothing particularly unusual here. 

We understand the naivety on exchanging on notice without inserting a back date, but we weren't really made aware of our options by our solicitors at the time. - ah, yes that's quite a failing by them then. I'd ask your solicitor whether you're really in a perpetual contract then.. what happens if the builder serves notice in 2050? We are  hoping the developers will get a fright from knowing our mortgage offer runs out soon and to temporarily accommodate the current occupants but we are really clutching at straws.  - no, they wouldn't care.. if you don't have a mortgage offer and can't purchase, then they'd keep your deposit, resell and sue you for any further shortfall.
Our solicitors have pretty much told us we don't have a legal leg to stand on. 

This whole situation has left a really sour taste in our mouths, but we just want to get into our first home. Has anyone has experienced anything similar? Any advice or tips would be greatly appreciated. 

Thank you.

Check whether you really have no long stop date - as otherwise you're effectively in a perpetual contract. If no long stop, then IMO the solicitor may have something to answer for letting you sign that. 

However on the face of it, if you've exchanged then you must complete per their notice, and any legal / survey / mortgage application costs are your problem. 

eddddy

It sounds like your solicitor might have some blame here.

I would have thought that your solicitor had a duty to warn you about the consequences of exchanging contracts - with a 6 month mortgage offer but without a long-stop date.

But it's unlikely that your solicitor would voluntarily admit that they made a mistake - because of a potential claim for damages. (Was the solicitor recommended by the developer?)

I'm not sure why your mortgage advisor is so surprised by this - I guess they've never dealt with new build mortgages or part/ex. 


Unfortunately, the developers are unlikely to  "get a fright" from this, because you'd be liable for all their losses. For example, if they ended up having to re-sell the part/ex property cheaply, you'd have to pay them the difference, plus you'd have to pay all their costs of re-selling.


Another option for you would be to start applying for another mortgage (maybe with another lender), before the current mortgage offer runs out. The new mortgage offer would then be for another full 6 months.

But check the consequences of this with your mortgage advisor - for example, whether another set of credit searches might 'spook' your current lender,

JSheffield

Our mortgage adviser has said he is quite confident we can secure an alternative mortgage should our current offer not be extended. I am going to contact our solicitors and ensure we don't have a long stop date. 

AFF8879

I am shocked your solicitor allowed you to exchange with no long stop date at all. I’ve never actually heard of that happening. Could it not be that there is a long stop, but the developer included some contractual provisions to extend it due to COVID etc?

sheffield_soldier

Dropped you a message

LeoPP

I am in similar situation. The seller's solicitors are insisting that we exchange contracts with completion on notice. But my solicitors are against this as there is no guarantee that new build on the top of the chain will be completed before my mortgage offer expires. My solicitors have proposed a clause to be inserted into the contract to allow exchange and if completion is not achieved by agreed date, or my mortgage offer expires, then I can terminate the contract and my deposit will immediately be returned. Awaiting for the seller’s solicitors" response.

canaldumidi

Don't get bullied into agreing something your solicitor is not happy with. You are paying a professional- follow their advice.

JSheffield

We are now in our house despite the lengthy delay but yes agree with the above post. Follow your solicitors advice and insist on a long stop date. The developers might not agree to it but at least you’ve tried. 

LeoPP

JSheffield said:

We are now in our house despite the lengthy delay but yes agree with the above post. Follow your solicitors advice and insist on a long stop date. The developers might not agree to it but at least you’ve tried. 

Thanks and congratulations. How did it work out to completion?