Offer vendors money to move into rented to reduce exchange-completion gap

fourmarks

htcclub said:

But I actually work in risk management. Where we look at the risk of something happening and hedge/reduce/get indemnity towards that risk. I am a very risk averse person, it goes against my nature to just hope I am not that 1 in a thousand unlucky person.

How are you at crossing roads?

htcclub

TripleH said:

Was the 3 week notice in the terms from the go?
I would become concerned if a buyer asked to reduce the deposit, it would send alarm bells that the deal was going to collapse. "If they only want to risk 3%, they think the purchase is going to fail / they are going to try to drop the price at the last minute".
It depends how experienced the sellers are.

The roughly 3 weeks is a new thing. They want to exchange first then sign a tenancy and want time to sort this.
On the deposit idea, my solicitor won't budge on adding a contract rider, so that won't work.
Ideal situation would be exchange-completion on same day for me, but they are a young family so not sure they would go for this.

A__L said:

@htcclub I'm a bit confused - why do your sellers need to go into a rental?

Thanks yes I might speak to my solicitor, they might have advice. My buyers are end of chain, not buying anything, so they will rent and want 3 weeks post exchange to sort that out.

Martico

Your vendors sound entirely reasonable asking for that time to sort a rental, sorry. I don't think they'll take well to assuming 100% of the risk

A__L

@htcclub have the sellers already found a rental or are they still looking for one?

htcclub

Martico said:

Your vendors sound entirely reasonable asking for that time to sort a rental, sorry. I don't think they'll take well to assuming 100% of the risk

I can see a same day exchange-completion is very risky for them. But currently they are asking me to take all the risk. If I fail to complete they can rent and resell their house out and keep my 40k deposit. If they can't complete  - I get nought!

A__L said:

@htcclub have the sellers already found a rental or are they still looking for one?

they have found a rental, they want to exchange so that they can sign for it and move in 3 weeks.

A__L

If you are the reason that you don't complete you lose your deposit. If they are the reason after exchange then you get your deposit back + interest. It makes sense that they want to exchange before they move out and rent as it is a guarantee. Why do you think you will pull out after exchange?

SDLT_Geek

So your sellers have found a rental.

There is a conveyancing mechanism called “a release“ which might be worth considering in this case.

A release is usually used so as to synchronise exchange of contracts in a chain, but might be useful here so as to synchronise:

(a) your sellers signing the tenancy and

(b) exchange of contracts on the sale to you

and so enable them to agree a shorter completion date.

The mechanics here could be that you instruct your solicitors to “release“ your purchase contract for a set period, usually to the end of the working day.  Terms such as the completion date and deposit would need to be agreed.

That commits you unilaterally, so that if your sellers “take you up” on the release, contracts are exchanged on your purchase without them needing to do more than tell you conveyancers.

Surrey_EA

htcclub said:

Ideal situation would be exchange-completion on same day for me, but they are a young family so not sure they would go for this.

In a simultaneous exchange/complete, that would mean they take all the risk. Signing up for a rental agreement but without the comfort you'll go ahead. 3 weeks between exch/complete is far from unusual.

Martico

htcclub said:

Martico said:

Your vendors sound entirely reasonable asking for that time to sort a rental, sorry. I don't think they'll take well to assuming 100% of the risk

I can see a same day exchange-completion is very risky for them. But currently they are asking me to take all the risk. If I fail to complete they can rent and resell their house out and keep my 40k deposit. If they can't complete  - I get nought!

Completion is entirely within your gift, why on earth would they want to assume that risk?

htcclub

SDLT_Geek said:

So your sellers have found a rental.

There is a conveyancing mechanism called “a release“ which might be worth considering in this case.

A release is usually used so as to synchronise exchange of contracts in a chain, but might be useful here so as to synchronise:

(a) your sellers signing the tenancy and

(b) exchange of contracts on the sale to you

and so enable them to agree a shorter completion date.

The mechanics here could be that you instruct your solicitors to “release“ your purchase contract for a set period, usually to the end of the working day.  Terms such as the completion date and deposit would need to be agreed.

That commits you unilaterally, so that if your sellers “take you up” on the release, contracts are exchanged on your purchase without them needing to do more than tell you conveyancers.

Sorry SDLT_Geek, is it related to this screenshot, from the law society? https://www.lawsociety.org.uk/topics/property/formulae-for-exchanging-contracts-by-telephone

How many extra days could this give me do you think? The problem seems that even if I release the contract, I have effectively signed, but are you saying it allows completion earlier than the agreed date?