Exchange with no fixed completion date

House13

We are buying a property for 350k. Our sale to FTB is progressing nicely. Our vendors are buying a new build with a target completion date of Sept/ Oct. They have requested exchange at the end of May with an open ended completion date to match when their new build is ready. I am reluctant to do this as it may lead to my mortgage offer expiring. Additionally I do not want the completion date to be delayed for months after we have exchanged due to issues such as covid/ supply issues/ developer going bust etc.

Can anyone advise on what the standard process is when your vendor is buying a new build and what our options are.

Thanks

eddddy

House13 said:

Can anyone advise on what the standard process is when your vendor is buying a new build and what our options are.

There are two main options:

• You can insist on an early fixed completion date - meaning that your vendor would have to move out into temporary accommodation (e.g. renting) until their newbuild is ready. So that you could move into their house.

• You can insist on a 'long-stop' date in the contract.

A 'long-stop' date would work as follows:

Let's say your mortgage expires on 20th Sept - so you make that (or a few days before) the 'long-stop' date. If the new build isn't ready by then, anyone in the chain can decide not to proceed and the whole chain is 'cancelled'. You all stay where you are.

But if everyone in the chain manages to get a new or extended mortgage offer before 20th Sept, they can all agree to wait longer.


Everyone in the chain (including the new build developer) would need to agree to the 'long-stop' date - so that might be a major stumbling block.

(Obviously your FTB buyer will be in the same situation as you - their mortgage offer will have a time limit as well.)

onylon

I think it's very cheeky of your vendor to expect you to exchange but then wait indefinitely to complete. Personally I would insist on a long stop date to protect you and your buyer.

If things go wrong with the new build your vendor can move into rented accommodation so that the rest of the chain can complete.

kazwookie

I'd be pushing the vendor to move in to rented / with family.

New builds nearly always have a time delay on them, so if you think they will be ready in September, realistically you would be looking at Nov/ Dec time

House13

Just to add some more information. We are likely to complete the sale of our current house in June and move in with parents. So I am fine with waiting for the next house (within reason) I am just concerned with mortgage expiry (and the likely higher rate) and the potential for the completion to extend indefinitely.

andyf1980

I wouldn’t do it. Our new build was delayed more than 6 months. 

user1977

You ought to be insisting that the people buying the shiny new house put up with the hassle of staying somewhere temporarily, rather than pass all the trouble down the chain. But that's something you probably ought to have insisted on at the outset.

House13

user1977 said:

You ought to be insisting that the people buying the shiny new house put up with the hassle of staying somewhere temporarily, rather than pass all the trouble down the chain. But that's something you probably ought to have insisted on at the outset.

Sale was confirmed Friday. My wife spoke to estate agent and was informed of the sellers wishes. I rang back and told them my concerns.

Regards

mrschaucer

It does make me cross when people try to make their problem your problem.  The ones buying the new house should be moving into rented accommodation until their house is (eventually) ready.

user1977

House13 said:

user1977 said:

You ought to be insisting that the people buying the shiny new house put up with the hassle of staying somewhere temporarily, rather than pass all the trouble down the chain. But that's something you probably ought to have insisted on at the outset.

Sale was confirmed Friday. My wife spoke to estate agent and was informed of the sellers wishes. I rang back and told them my concerns.

Fair enough - stand your ground then, assuming that's what you want.