Failed to complete house purchase after exchange due to mortgage lender not releasing funds

Woodsie81

We exchanged on a house purchase 1 month ago, with mortgage offer in place, and as far as we knew everything was signed off and ready to go yesterday 15th March. 
On 10th March, our lenders contacted our solicitor to request evidence showing our private water supply complies with statutory regs for safe drinking water. We had already provided a report showing this so as far as we were concerned we had already met their requirements, but they came back on Friday (2 working days before we were due to complete) to say that the report had to be conducted in our name (as buyers), the first time this had ever been specified but they will not release the funds without it.

A new test is underway but will take up to 10 days (maybe slightly less but it's a scientific process that can't be expedited, it will take as long as it takes) so we failed to complete when we had agreed to and are now in breach of contract. We are also only 10 days from our mortgage offer expiring so if it takes any longer for the lenders to release the funds, we will no longer have a valid mortgage offer, could be sued for damages, and not even have a house to show for it. It feels very unfair that we weren't notified of this requirement for the water report to be in our name until after we had exchanged contracts , and by the time we were made aware of it, it was too late to do anything about it in time to complete. We have tried to appeal through our mortgage broker, through our solicitor and ourselves to no avail so we are now just waiting for the new report and hope that it comes through quickly so we can get back on track and proceed with our purchace. We are at the bottom of a chain of 4, we sold our house 9 months ago and have been paying for storage and living in airbnb's/ with family members since, waiting for this purchase to go through for 7 of those months. We are desperately hoping that this is a delay and not the end but don't have much control over what happens next.

Our sellers are absolutely fuming (we had a great relationship with them prior so had swapped numbers which we now regret!) and are threatening legal action, and screaming down the phone at us to just 'get the money'. (I have respectfully asked them to communicate via the solicitors from now on as this is making us feel sick)

Very very stressful and I'm struggling to get to grips with what we are actually responsible for should our sellers 'take legal action' against us and claim for damages. They have been moving out for two weeks already so will be incurring extra removal fees, hefty storage charges (they have a LOT of stuff) potential accommodation costs if they choose not to continue living in their empty house. If they take us to court, what are they entitled to claim against us? And is there any chance of us claiming anything from the lenders for not giving us fair warning? The T&C's of the mortgage don't specify that the report needs to be in our name, otherwise we would have done the test months ago. Even after exchange of contracts, we would have had plenty of time to do a new test, had they told us then...

Any guidance on likely outcomes, potential charges we may have to pay, or words of comfort from a similar experience? 

MWT

Has your seller served you with a 'notice to complete' ?

mr_stripey

what a nightmare. Can't offer any real advice I'm afraid, but I really feel for you. Not helpful to have the sellers screaming at you either!

user1977

Can't the provider of the existing report simply readdress it to you?

Thrugelmir

Woodsie81 said:

 It feels very unfair that we weren't notified of this requirement for the water report to be in our name until after we had exchanged contracts , and by the time we were made aware of it,

How was the report obtained and why was it done this way? 

Woodsie81

Thrugelmir said:

Woodsie81 said:

 It feels very unfair that we weren't notified of this requirement for the water report to be in our name until after we had exchanged contracts , and by the time we were made aware of it,

How was the report obtained and why was it done this way? 

It's a standard test but the report was actually from the previous owners, so clearly wasn't a requirement for our sellers to have it re-tested in their name before they purchased the property. They had the water purification system serviced annually to make sure it was doing what it needed to do but that doesn't provide the evidence the lenders needed in our name.  

Woodsie81

user1977 said:

Can't the provider of the existing report simply readdress it to you?

Sadly not. It also needs to be from a sample taken within the last 12 months (something we only discovered when we asked the same question)

Woodsie81

MWT said:

Has your seller served you with a 'notice to complete' ?

Not yet - have been reading about that after our solicitor mentioned this is what she would expect to happen next but nothing so far. We are only one day past our agreed completion date so maybe it'll come later... 

MWT

Woodsie81 said:

user1977 said:

Can't the provider of the existing report simply readdress it to you?

Sadly not. It also needs to be from a sample taken within the last 12 months (something we only discovered when we asked the same question)

To be fair, that should have been expected, an old report from 2 owners ago was never going to be proof of anything useful.

In general having reports in your name is important as otherwise you have no recourse should the report prove inaccurate as there was no duty of care to you when it was prepared.

Woodsie81

mr_stripey said:

what a nightmare. Can't offer any real advice I'm afraid, but I really feel for you. Not helpful to have the sellers screaming at you either!

Thank you - the being screamed at is actually the worst part. Obviously we are sorry for the sellers and feel awful that they are in this position, but I just don't see how we could've possibly done anything differently to avoid this. We had exchanged, we genuinely thought we were good to go!

MWT

Woodsie81 said:

MWT said:

Has your seller served you with a 'notice to complete' ?

Not yet - have been reading about that after our solicitor mentioned this is what she would expect to happen next but nothing so far. We are only one day past our agreed completion date so maybe it'll come later... 

The longer they leave that the better for you and the lower the chances they will have a legitimate claim for damages as they are failing to make time the essence of the contract at this point...

Take your solicitor's advice and unless they say otherwise do keep the communication through them to minimise the risk of inadvertently creating any liability that you do not already have.