Advice? Auction Property - Seller Failed to Complete

myuserid

Although I appreciate that the wording will not be identical for other people's contracts, is anyone that had to pay / received interest due to late completion able to share how the number of days was calculated in their case?

For example, if the agreed completion date was the 10th of the month (with 2 pm cut off) and the defaulting party completed before 2 pm on the 11th of the same month (i.e. the next day), which of the following would be used to calculate the interest?

1.      (11 - 10)         =     1 day          =>    interest is 1 times daily rate
2.      (11 - 10) - 1    =     0 days        =>    interest is 0 times daily rate, i.e. none is owed
   

user1977

myuserid said:

Although I appreciate that the wording will not be identical for other people's contracts, is anyone that had to pay / received interest due to late completion able to share how the number of days was calculated in their case?

For example, if the agreed completion date was the 10th of the month (with 2 pm cut off) and the defaulting party completed before 2 pm on the 11th of the same month (i.e. the next day), which of the following would be used to calculate the interest?

1.      (11 - 10)         =     1 day          =>    interest is 1 times daily rate
2.      (11 - 10) - 1    =     0 days        =>    interest is 0 times daily rate, i.e. none is owed
   

It's one day. The principle is that you've lost on a day's interest because you couldn't bank the money until the next banking day.

myuserid

user1977 said:

It's one day. The principle is that you've lost on a day's interest because you couldn't bank the money until the next banking day.

That was my understanding as well but my solicitor is adamant that calculation 2 be used because...because...?

Well, I've actually asked my solicitor to explain why about 7 times and specifically asked him to point out where it states this in the documentation 4 times - the closest I got to an answer (as he seems to have an aversion to directly answering my questions) was him twice admitting that "the Standard Conditions do not provide any indication" (I hadn't limited my questions to the SCS but I guess the implied answer is 'because he says so').


If anyone is curious, a summary of his explanations are:

- I am only entitled to interest if the seller completes after the cut off time on the day after the agreed completion date.

     According to the contract that is considered the second day after completion.

- The contractual cut off is after the cut off time on the day after the agreed completion date.

- I have lost interest in the property for y number of days for dates n (agreed completion date) up to n+y (the day prior to expected late completion date).

     Actually dates n up to n+y equate to y+1 days, e.g. the weekend just passed covered dates 22nd-23rd (so n is 22 and y is 1), which is 2 days (y+1) not 1 day.

    I tried to make this easier to understand by writing out each individual date from agreed completion to late completion and numbering them from 0 days late (agreed completion date) all the way up to y+1 (late completion date). He responded by reducing each number by 1 and labelling the day after agreed completion as 0 days late!

- The property belongs to the seller up to the cut off time the day after agreed completion.

- He's not saying the property belongs to the seller.

- I am not entitled to interest until after the cut off time, 24 hours after the contractual completion date.

- He's not saying the seller is entitled to complete a day late.

   Then why is he excluding the first late 24 hours from the calculation?

- I am only entitled to charge interest after the cut off time on the day after the contractual completion date.

- The seller is entitled to interest if I hadn't completed BY the cut off time ON the contractual completion date itself.

- I cannot claim interest until after the cut off time the day after the agreed completion date, this is the SAME for the seller.


I tried to get him to explain why he believes (although contradicted in the last statement) that the number of days in the calculation is one less if the seller defaults than if the buyer defaults, but of course he did not answer my direct questions.

Nothing in the contract states or even implies that the seller essentially gets a 'free pass' for the first late day. In fact, a clause on agreed vacant possession states that the seller is considered in default if they haven't provided vacant possession (i.e. fulfilled their contractual obligations) by the cut off time on the day of completion itself, even if they have not yet received funds from the buyer for this reason.

Now, where is the 'banging one's head against a brick wall' emoji?

GDB2222

myuserid said:

user1977 said:

It's one day. The principle is that you've lost on a day's interest because you couldn't bank the money until the next banking day.

That was my understanding as well but my solicitor is adamant that calculation 2 be used because...because...?

Well, I've actually asked my solicitor to explain why about 7 times and specifically asked him to point out where it states this in the documentation 4 times - the closest I got to an answer (as he seems to have an aversion to directly answering my questions) was him twice admitting that "the Standard Conditions do not provide any indication" (I hadn't limited my questions to the SCS but I guess the implied answer is 'because he says so').


If anyone is curious, a summary of his explanations are:

- I am only entitled to interest if the seller completes after the cut off time on the day after the agreed completion date.

     According to the contract that is considered the second day after completion.

- The contractual cut off is after the cut off time on the day after the agreed completion date.

- I have lost interest in the property for y number of days for dates n (agreed completion date) up to n+y (the day prior to expected late completion date).

     Actually dates n up to n+y equate to y+1 days, e.g. the weekend just passed covered dates 22nd-23rd (so n is 22 and y is 1), which is 2 days (y+1) not 1 day.

    I tried to make this easier to understand by writing out each individual date from agreed completion to late completion and numbering them from 0 days late (agreed completion date) all the way up to y+1 (late completion date). He responded by reducing each number by 1 and labelling the day after agreed completion as 0 days late!

- The property belongs to the seller up to the cut off time the day after agreed completion.

- He's not saying the property belongs to the seller.

- I am not entitled to interest until after the cut off time, 24 hours after the contractual completion date.

- He's not saying the seller is entitled to complete a day late.

   Then why is he excluding the first late 24 hours from the calculation?

- I am only entitled to charge interest after the cut off time on the day after the contractual completion date.

- The seller is entitled to interest if I hadn't completed BY the cut off time ON the contractual completion date itself.

- I cannot claim interest until after the cut off time the day after the agreed completion date, this is the SAME for the seller.


I tried to get him to explain why he believes (although contradicted in the last statement) that the number of days in the calculation is one less if the seller defaults than if the buyer defaults, but of course he did not answer my direct questions.

Nothing in the contract states or even implies that the seller essentially gets a 'free pass' for the first late day. In fact, a clause on agreed vacant possession states that the seller is considered in default if they haven't provided vacant possession (i.e. fulfilled their contractual obligations) by the cut off time on the day of completion itself, even if they have not yet received funds from the buyer for this reason.

Now, where is the 'banging one's head against a brick wall' emoji?

I can't understand why you are worrying about this? Assuming interest at 4% over base rate, one day's interest is £17 per £100k of purchase price. Surely, you have bigger things to worry about? If you pester your solicitor about minutiae like this, he/she won't have time to deal with the big stuff. 

Regardless of your entitlement to this £17, how do you propose to enforce that entitlement, anyway?  Supposing that eventually you are entitled to a couple of hundred pounds worth of interest, are you really going to sue for that, particularly bearing in mind that the seller apparently doesn't have enough money to pay off the shortfall on the mortgage? 

Tiglet2

OP, your solicitor is not going to spend time calculating this for you, let alone even read your lengthy explanation, particularly if you instructed a no completion, no fee solicitor.  If you are paying by the hour however, they will happily charge you their hourly rate of £200 per hour to save you a bit of interest.....

ss2020jd

I am struggling a bit with the equations and your solicitor’s logic. 

But in case it is helpful here’s what happened In our case. 

1) The buyers’ buyer’s solicitor notified our buyer that completion wouldn’t be happening a day before the completion date.
2) The notice was served as soon as the cut-off time for the contract passed on the (original) day of completion and it had therefore been breached - 2pm in our case. 

The calculation was based on the number of days that completion was delayed by. 

So in our case completion was due on the 22nd of the month.

The solicitor of the buyer at the bottom of the chain notified our buyer on the 21st, the day before completion day, that it would not be possible and completion would more likely be the 26th. In fact it ended up being the 27th. Total days compensation due = four: 23rd, 24th, 25th, 26th. Plus the solicitor’s cost for serving the notice.

I remember being unsure of whether to serve but as our buyers led the decision and they had lost money having to cancel their removal company etc we then had to serve them. 

myuserid

ss2020jd said:

The solicitor of the buyer at the bottom of the chain notified our buyer on the 21st, the day before completion day, that it would not be possible and completion would more likely be the 26th. In fact it ended up being the 27th. Total days compensation due = four: 23rd, 24th, 25th, 26th. Plus the solicitor’s cost for serving the notice.

Thanks for sharing your example. It sounds like your solicitor also used the second calculation, so that's interesting to know.