Purchase failed at last minute due to ‘Improvement grant’ on property

BillieBoy

Thank you in advance

I will start by saying that I am based in Scotland and writing on behalf of my husband.

My husband is moving out of the family home and buying his own house. He found a fisherman’s cottage in a local conservation area and was due to complete on May 11th. 

On the afternoon of the 11th he chased up his solicitor to be told that she had spotted an improvement grant on the property and had to run it past the lender before she could proceed. They hadn’t responded and therefore nothing could be done.

The property was being sold by the estate of the previous resident and he had taken out an improvement grant from the council for £5,700 to repair windows. There were conditions attached to the grant such as property having to be main residence otherwise grant would need to be repaid. I don’t know at this point whether it has made a difference but my husband’s solicitor took it upon herself to assume that it was a holiday let as he was married and gave the council incorrect information. I believe that that has since been corrected but I don’t know if it has any baring on the overall issue.

Due to the time it took for his solicitor to speak to the council the funds were returned to Nationwide.

Nationwide have since come back saying that they either require for the grant to be paid by the seller or for the Council to provide a letter saying that it does not need to be repaid. The seller will not pay the grant and is if the belief that he can resell to someone else with no issue. The council have told the solicitor that they will not provide a letter to this effect as they cannot comment on individual cases as circumstances can change and just because the grant isn’t repayable now doesn’t mean that it won’t become so (it is a ten year grant with four left to run).

My husband has offered to pay the grant but the solicitor has said that there is no mechanism to allow him to do so.

She has said that he needs to change mortgage providers but the interest rate has increased and the increase over the term of the mortgage is far in excess of the £5,700 grant that my husband is willing to pay!!

Is there anything that he can do??

Flugelhorn

not sure whether it is possible but can he give the sellers the money to pay the grant?

BillieBoy

He has asked the solicitor if this is an option and they say not as there is no way to guarantee that they will either pay the grant once they have the money or that the sale will go through successfully once it has been paid. There is no reason to believe it wouldn’t complete as it was previously good to go but in their view there is always a chance.

Flugelhorn

that could be a problem and sounds like the solcitor is being very cautious - if it is an estate sale then there is often the problem of more than one beneficiary agreeing with what happens - maybe that they can't agree on paying back the grant out of the proceeds of the sale. 

Section62

BillieBoy said:

He has asked the solicitor if this is an option and they say not as there is no way to guarantee that they will either pay the grant once they have the money or that the sale will go through successfully once it has been paid. There is no reason to believe it wouldn’t complete as it was previously good to go but in their view there is always a chance.

I think your husband needs to start by considering a change of solicitor.  The current one seems to be creating new problems (e.g. giving wrong information to the council) rather than doing their job of giving advice on how to solve the problems that crop up.

I don't know how the system in Scotland works, but the equivalent in England of a Local Land Charge would typically be repaid at the point of completion either out of the proceeds of the sale or by additional funds deposited with the solicitor for that purpose.

A good solicitor who knows the law in Scotland should surely be able to figure out a similar solution.  I would have thought your husband's position of being willing to repay the improvement grant should make it a lot simpler than having the grant transferred with the property into his name.

user1977

Refer the solicitor to the Law Society's advice here (if they haven't already considered it) 

https://www.lawscot.org.uk/members/rules-and-guidance/rules-and-guidance/section-f/division-c/advice-and-information/notices-of-improvement-and-repair-grants/

BillieBoy

The frustration is that the grant doesn’t need to be repaid. The lender would settle for a letter from the local authority, in this case Moray, saying that repayment doesn’t need to be made providing the conditions continue to be met however my husband’s solicitor is saying that they have point blank refused to provide one as the grant itself clearly states the conditions.

The law society give the same advice too however husband’s solicitor can’t come up with creative solution https://www.lawscot.org.uk/members/rules-and-guidance/rules-and-guidance/section-f/division-c/advice-and-information/notices-of-improvement-and-repair-grants/

user1977

If the situation and the risks have been accurately described to the lender (we can't tell whether they have or not), then it's up to the lender what they do. Perhaps find a different lender after checking they have a more flexible attitude. The worst case scenario from the lender's point of view is the fixed amount of £5700 coming off the price first in a repossession, which depending on the loan to value percentage might not be an issue anyway.

You don't say whether missives had been concluded - I presume not? Any reason for it being left to the last minute? 

BillieBoy

The missives have been concluded. It is literally a case of the lender saying to proceed once they have a letter from the local authority saying that the grant has either been discharged or that it won’t need to be paid should the conditions be met.

the interest rates have risen and the overall costs of a new lender fees plus higher product rate are greater than the cost of paying the grant 

user1977

BillieBoy said:

The missives have been concluded.

In which case, isn't the seller in breach of contract?

sheramber

It is the OP 'S husband who has failed to completed the sale as his lender has not released the money.