Am I worried for nothing? Exchanging 3 months prior to completion.Stressing out

pinkteapot

cramsteems said:

pinkteapot said:

We once exchanged with 2.5 months from exchange to completion - and that didn't involve a new-build. It was a long chain and between exchange and completion there was Xmas/New Year, and various parties had holidays and surgeries (!). I didn't give it much thought to be honest!

Your mortgage will only be pulled with no chance of getting another one if you have a significant change to your circumstances - main one being job loss. How secure are your job(s)? 

You will overpay a bit for buildings insurance. Most insurers are "computer says no" to a period that long between exchange and completion. They're set up for four weeks max of you being responsible for the house but not yet living in it. We had to get insurance from Hiscox who are more expensive but more flexible. 

Jobs very secure, there won't be any change to our finances. We already got home & building insurance from Aviva, hopefully its okay? We put the address as the house we are buying.

Did you tell Aviva you're not actually living at the property yet? There will be a clause saying you can't be away from the house for more than X days. Home insurance will, by default, assume you are living at the property insured. 

It's fine if you told them you're insuring a property you're in the process of buying. 

pinkteapot

Marvel1 said:

I would want advice from my solicitor what would happen if they fail to complete on the date provided.

If it's a normal exchange with completion on a specified date (rather than completion on notice) then it's (relatively) straightforward. If the sellers refuse to complete then OP's solicitor will issue a Notice to Complete which tells the sellers they have to complete within ten days. If that time elapses then OP can take court action to recover any financial losses they've incurred. More info here: 

https://www.taylorwessing.com/en/insights-and-events/insights/2019/09/a-sellers-prerogative-when-a-seller-refuses-to-complete-a-sale 

There was a VERY long thread a few years back from a buyer whose seller changed their mind after exchange and refused to sell. I seem to remember that poster eventually got a reasonable amount of cash. Unfortunately though, buyers often stand to lose a lot more than sellers if they renege after exchange. 

In this case, the most likely thing isn't the seller changing their mind completely and no longer wanting to sell, but them wanting to stay in the house longer so they don't have to arrange temporary accommodation if their new-build is delayed. 

SpiderLegs

cramsteems said:

SpiderLegs said:

I don’t see the problem. 

Given it seems to be the thing you are worried about, when you agreed to exchange with a three month lead time, you specified that if your mortgage offer was pulled you could walk away with no penalty.

You did specify that didn’t you? 

We asked our solicitor to add that, however we have been told it is unlikely to be agreed as the seller would then likely want the same clause from the seller of the new home and that will not happen. The new home provider, don't give a crap, they want an exchange asap so they have a guaranteed buyer otherwise they will happily take the sellers deposit and then the seller will take ours. 

So if you are that bothered about the risk you don’t exchange.

TheJP

Continental said:

I wouldn’t exchange with a such a long time to completion.

You do realise that you would have to purchase buildings insurance at exchange? Anything major going wrong with the house would then be *your* responsibility.

The sellers should go into rented/AirBnB or stay with relatives if they are so desperate to exchange with a long lead time......with a shortage of building materials who is to say it the vendors new build will even be ready? It might not be ready until after Easter or early Summer!

I doubt they will put it (the house you are trying to buy) back on the market as there is no way they will be able to exchange quickly. 

There will be other mortgages available.....I wouldn’t let them bully you into exchanging right now. Indeed there will be plenty of other properties available in the New Year. 

Crazy talk. Just because you exchange doesn't mean you would be liable for anything that goes wrong with the house. I also doubt the vendors will cancel their own cover if exchange happens considering they don't have to insure a new build until completion as that's covered by the developers.

You could ask for a mortgage extension, many lenders offer 3-6 months based on the situation. I would probably stipulate that you would only exchange if there was a clause that the sellers move out even if their property is yet not ready. 

MaryNB

TheJP said:

Continental said:

I wouldn’t exchange with a such a long time to completion.

You do realise that you would have to purchase buildings insurance at exchange? Anything major going wrong with the house would then be *your* responsibility.

The sellers should go into rented/AirBnB or stay with relatives if they are so desperate to exchange with a long lead time......with a shortage of building materials who is to say it the vendors new build will even be ready? It might not be ready until after Easter or early Summer!

I doubt they will put it (the house you are trying to buy) back on the market as there is no way they will be able to exchange quickly. 

There will be other mortgages available.....I wouldn’t let them bully you into exchanging right now. Indeed there will be plenty of other properties available in the New Year. 

Crazy talk. Just because you exchange doesn't mean you would be liable for anything that goes wrong with the house. I also doubt the vendors will cancel their own cover if exchange happens considering they don't have to insure a new build until completion as that's covered by the developers.

You could ask for a mortgage extension, many lenders offer 3-6 months based on the situation. I would probably stipulate that you would only exchange if there was a clause that the sellers move out even if their property is yet not ready. 

Liability between exchange and completion is not that clear cut. You still have to proceed with completion if the house burns down after exchange so it's wise to have insurance in place. Many lenders insist on insurance being in place from exchange. I had to send my solicitor my policy details before she would proceed with exchange. 

ETA: from citizens advice

https://www.citizensadvice.org.uk/housing/moving-and-improving-your-home/problems-with-buying-and-selling-a-home/#h-problems-with-the-property

A house may be damaged after contracts have been exchanged but before the sale is completed, for example, a burst pipe or a broken window. It is the seller’s responsibility to inform the buyer of any damage. It is however the buyer’s responsibility to insure the property from the date of exchange of contracts and to have the repairs carried out. The buyer will then have to make a claim on their insurance policy.

TheJP

MaryNB said:

TheJP said:

Continental said:

I wouldn’t exchange with a such a long time to completion.

You do realise that you would have to purchase buildings insurance at exchange? Anything major going wrong with the house would then be *your* responsibility.

The sellers should go into rented/AirBnB or stay with relatives if they are so desperate to exchange with a long lead time......with a shortage of building materials who is to say it the vendors new build will even be ready? It might not be ready until after Easter or early Summer!

I doubt they will put it (the house you are trying to buy) back on the market as there is no way they will be able to exchange quickly. 

There will be other mortgages available.....I wouldn’t let them bully you into exchanging right now. Indeed there will be plenty of other properties available in the New Year. 

Crazy talk. Just because you exchange doesn't mean you would be liable for anything that goes wrong with the house. I also doubt the vendors will cancel their own cover if exchange happens considering they don't have to insure a new build until completion as that's covered by the developers.

You could ask for a mortgage extension, many lenders offer 3-6 months based on the situation. I would probably stipulate that you would only exchange if there was a clause that the sellers move out even if their property is yet not ready. 

Liability between exchange and completion is not that clear cut. You still have to proceed with completion if the house burns down after exchange so it's wise to have insurance in place. Many lenders insist on insurance being in place from exchange. I had to send my solicitor my policy details before she would proceed with exchange. 

ETA: from citizens advice

https://www.citizensadvice.org.uk/housing/moving-and-improving-your-home/problems-with-buying-and-selling-a-home/#h-problems-with-the-property

A house may be damaged after contracts have been exchanged but before the sale is completed, for example, a burst pipe or a broken window. It is the seller’s responsibility to inform the buyer of any damage. It is however the buyer’s responsibility to insure the property from the date of exchange of contracts and to have the repairs carried out. The buyer will then have to make a claim on their insurance policy.

Simple fix, add it to the contract that the seller will insure the property and be liable for any repairs if anything should break. There is no legal stipulation that you are liable for anything that happens to the house after exchange, the sellers are still the legal owners. lenders want you to insure it asap as their capital is at risk. 

Thrugelmir

If you have concerns. Run them past your solicitor. 

MaryNB

TheJP said:

MaryNB said:

TheJP said:

Continental said:

I wouldn’t exchange with a such a long time to completion.

You do realise that you would have to purchase buildings insurance at exchange? Anything major going wrong with the house would then be *your* responsibility.

The sellers should go into rented/AirBnB or stay with relatives if they are so desperate to exchange with a long lead time......with a shortage of building materials who is to say it the vendors new build will even be ready? It might not be ready until after Easter or early Summer!

I doubt they will put it (the house you are trying to buy) back on the market as there is no way they will be able to exchange quickly. 

There will be other mortgages available.....I wouldn’t let them bully you into exchanging right now. Indeed there will be plenty of other properties available in the New Year. 

Crazy talk. Just because you exchange doesn't mean you would be liable for anything that goes wrong with the house. I also doubt the vendors will cancel their own cover if exchange happens considering they don't have to insure a new build until completion as that's covered by the developers.

You could ask for a mortgage extension, many lenders offer 3-6 months based on the situation. I would probably stipulate that you would only exchange if there was a clause that the sellers move out even if their property is yet not ready. 

Liability between exchange and completion is not that clear cut. You still have to proceed with completion if the house burns down after exchange so it's wise to have insurance in place. Many lenders insist on insurance being in place from exchange. I had to send my solicitor my policy details before she would proceed with exchange. 

ETA: from citizens advice

https://www.citizensadvice.org.uk/housing/moving-and-improving-your-home/problems-with-buying-and-selling-a-home/#h-problems-with-the-property

A house may be damaged after contracts have been exchanged but before the sale is completed, for example, a burst pipe or a broken window. It is the seller’s responsibility to inform the buyer of any damage. It is however the buyer’s responsibility to insure the property from the date of exchange of contracts and to have the repairs carried out. The buyer will then have to make a claim on their insurance policy.

Simple fix, add it to the contract that the seller will insure the property and be liable for any repairs if anything should break. There is no legal stipulation that you are liable for anything that happens to the house after exchange, the sellers are still the legal owners. lenders want you to insure it asap as their capital is at risk. 

The lender may not release the mortgage unless the buyer has insurance in place so that "simple fix" may not be that simple, or even a fix. 

Also house insurance is in the range of like £100 to £200. Why take any risk for such a small amount of money? 

eddddy

cramsteems said:

We have a completion date (we had to fight for this, they just wanted it to be on notice but our mortgage offer would likely expire and there is no guarantee we would have gotten another one).

Are you sure you've got a fixed completion date - not just a long-stop date?

Most newbuild developers wouldn't fix a completion date for an unfinished house 3 months on advance. (Their workforce might be struck down with COVID, or sever winter storms might cause delays.)

Or are your sellers saying they'll move into temporary accommodation if the newbuild isn't ready by that date?

But then what if the newbuild house is ready early - before your fixed completion date?

lookstraightahead

No I wouldn't have done it. You are basically giving your sellers security at risk to yourselves.