When to sign contracts and deed of covenant?

Troy_af

Morning,

So I have been sent contracts and a deed of covenant to sign and return to my solicitor. At this point the vast majority of enquiries raised for the house I'm purchasing have not yet been answered and therefore technically I'm still not in a position to commit to the purchase (its actually looking less likely I'll proceed given some of the complications).

Any way, my question is does signing the contracts commit me to purchase? My solicitor sent a letter says it does not and they would need permission from me first over the phone before contracts are exchanged. However I do not feel comfortable with this. Surely having signed contracts in their possession is all they need to exchange contracts. Word over the phone for permission does not sound very secure to me. Where is the proof that permission was or wasn't given?

Even more confusing is that they also said in a previous letter that unless they are told otherwise, then the act of me returning the signed mortgage offer is me telling them to exchange contracts on my behalf at the earliest opportunity. 

I don't see why I should not sign contracts when and only when I am happy to proceed? I would not do so when purchasing a car or a phone never mind a house!

Thanks.

eddddy

It's usual for buyers to sign contracts etc, and return them to their solicitor who will hold them until you give instructions over the phone to exchange contracts.

But you don't have to sign and return the contracts now, if you don't want to. But if you wait until everything is ready before signing and returning them, it might delay exchange by a few days.

If you do decide to sign and return them, you could include a covering letter saying that contracts must not be exchanged without explicit instructions from you - by phone, or by whatever other way you choose.

TBG01

Wait until you find out they can sign the contract on your behalf.

Slithery

TBG01 said:

Wait until you find out they can sign the contract on your behalf.

Only if you've given them specific POA to do so.

user1977

Slithery said:

TBG01 said:

Wait until you find out they can sign the contract on your behalf.

Only if you've given them specific POA to do so.

Don't think so - they can do so as your agent (assuming they have your instructions to do so). It is after all the norm in Scotland, but I don't think that's because of any Scottish legal peculiarities, just what's standard practice.

Troy_af

TBG01 said:

Wait until you find out they can sign the contract on your behalf.

I haven't gave them permission to do that.

user1977

Bottom line is that your solicitor acts in accordance with your instructions. So if you tell them not to exchange yet, they won't.

canaldumidi

Signing commits you to nothing. It's just another task ticked off which might later hold things up.

You are only commited to buy when Contracts are Exchanged, and your solicitor will call you at that point to check you want to proceed. Till then, he'll simply store the signed contract in readines.

Troy_af said:

...
Even more confusing is that they also said in a previous letter that unless they are told otherwise, then the act of me returning the signed mortgage offer is me telling them to exchange contracts on my behalf at the earliest opportunity.

That surprises me. Can you quote the letter? If true, then simply attach a letter to the signed mortgage offer clarifying that your commitment is subject the you confirming you wish to Exchange.

I don't see why I should not sign contracts when and only when I am happy to proceed? I would not do so when purchasing a car or a phone never mind a house!

Because different laws and processes apply. If you signed a contract for a car but kept it in your back pocket rather than give it to the seller, you would not be committed. You could then give it to the seller when you were ready.

Giving the house contract to your solicitor is the legal equivelant of putting the contract in your back pocket. Your solicitor works for you, does what you instruct, and will only Exchange Contracts (take the contract out of the back pocket) when you are ready.

When did you last use a solicitor to buy a car or phone.....?

steampowered

Slithery said:

Only if you've given them specific POA to do so.

Untrue, it is not uncommon for solicitors/conveyancers to sign contracts on their client's behalf.

Many will insist that the client signs the contract for risk management reasons, but that's not essential.

Troy_af

canaldumidi said:

Signing commits you to nothing. It's just another task ticked off which might later hold things up.

You are only commited to buy when Contracts are Exchanged, and your solicitor will call you at that point to check you want to proceed. Till then, he'll simply store the signed contract in readines.

Troy_af said:

...
Even more confusing is that they also said in a previous letter that unless they are told otherwise, then the act of me returning the signed mortgage offer is me telling them to exchange contracts on my behalf at the earliest opportunity.

That surprises me. Can you quote the letter? If true, then simply attach a letter to the signed mortgage offer clarifying that your commitment is subject the you confirming you wish to Exchange.

So the letter was referring to the timing of exchange of contracts and whether or not we should exchange before completion or exchange and complete on the same day. This is what it said -

"You must weigh up the pros and cons of this situation yourself but unless you contact us to the contrary then we will take the act of you signing and returning the Mortgage Deed to us as your instructions that you are happy for us to exchange contracts on your behalf at the earliest opportunity."

Now this is a little confusing because in a separate letter they did specifically say that signing the contracts commits you to nothing and we will need your permission to exchange.

RAS

You really need to ask them why they have sent contradictory letters, we can't guess.

I'd  follow up any phone call or email with a letter detailing the problem, and requiring a final letter confirming exactly what process they will use.