Money Laundering check after failed completion day

MillyMee

I wonder if anyone has come across a situation like this and if so does anyone have any thoughts.

We are selling a vacant property, cash buyer, no searches. The buyer sold a property and the proceeds from the sale are sat in their solicitors bank account in readiness for a fast transaction.

Pack sent to buyers solicitors, 5 weeks later our solicitor chased for enquiries. Enquiries received, dealt with straight away.

Estate Agent (EA) suggested a completion date which worked out just over 8 weeks from when the pack was sent. EA sent correspondence to our solicitor and we confirmed with our solicitor that we wanted to proceed with that date. 

Our solicitor had to chase a transfer deed, 2 weeks, 1 week and then 1 day before we were due to sign, which was 2 days before simultaneous exchange/completion. The buyer was due to sign the day after ourselves, which they did.

Friday completion day failed as the buyers solicitor said they hadn't done the reporting. The buyers solicitor has been incredibly difficult to get an update from by the EA or our solicitor. The following Wednesday their solicitor implied it would complete that day. It didn't and despite numerous efforts to contact the buyers solicitor, they haven't responded to our solicitor for the duration of 2 weeks.

The EA has struggled to get updates. The buyer is very unhappy as now their solicitor has asked for documents regarding Money Laundering / Source of Funds at this late stage even though the funds are in the solicitors bank account from a previous property sale for which they did the conveyancing. 

I thought the regulation was that AML / Source of Funds checks are done at the outset and the transaction cannot proceed unless the solicitor is happy with the findings?

It will soon be 3 weeks since failed completion day and the buyers solicitor is not responding to the EA either, so we are in the dark as to how long this may go on. We have financial costs as the property is empty and we are paying the mortgage, council tax etc so we do need to get some clarity.

Many thanks for any thoughts or pearls of wisdom, they will be greatly appreciated not only to myself but future people who read this post.

penners324

Threaten to pull out.

The buyer needs to get his solicitor to complete.

penners324

The buyer's solicitor works for the buyer. They will respond to them

Surrey_EA

At the risk of sounding pedantic, I wouldn't classify this situation as a failed completion, that to me would be when contracts have been exchanged but then completion has failed to take place. In this case contracts have not been exchanged and no legal contract agreement has been entered in to by either party. A target exchange (and simultaneous completion) date has been missed, that is all.

However, there remains the issue that you have an empty property that you wish to sell and a buyer who has now gone quiet. Probably the only course of action available would be to communicate to the buyer and their solicitor, via your solicitor and estate agent, that if you do not have a response by 'x' date that they are ready to exchange, then you will be forced to remarket the property.

user1977

What documents has the buyer's solicitor asked the buyer for that the buyer cannot provide?

MillyMee

penners324 said:

The buyer's solicitor works for the buyer. They will respond to them

Thank you. The buyer has said that their solicitor is not responding to  calls.

MillyMee

Surrey_EA said:

At the risk of sounding pedantic, I wouldn't classify this situation as a failed completion, that to me would be when contracts have been exchanged but then completion has failed to take place. In this case contracts have not been exchanged and no legal contract agreement has been entered in to by either party. A target exchange (and simultaneous completion) date has been missed, that is all.

However, there remains the issue that you have an empty property that you wish to sell and a buyer who has now gone quiet. Probably the only course of action available would be to communicate to the buyer and their solicitor, via your solicitor and estate agent, that if you do not have a response by 'x' date that they are ready to exchange, then you will be forced to remarket the property.

Thank you. I didn't know how to refer to the missed exchange / completion so thank you for your insight.

Is it usual for AML / Source of Funds checks to be done at this stage as I was under the impression that a solicitor could not undertake work on a case until the regulatory checks had been satisfied? The solicitor also did the conveyancing for the property that the buyer sold so one would imagine some checks were made for that transaction.

We have considered that we may have to issue an ultimatum.

Thank you again.

MillyMee

user1977 said:

What documents has the buyer's solicitor asked the buyer for that the buyer cannot provide?

Thank you for your reply.
We have been told by the EA that the buyer has submitted all documents requested by their solicitor. We are not privy to the detail. The buyer has said the solicitor is not responding to their calls.
Thank you again.

Surrey_EA

MillyMee said:

Surrey_EA said:

At the risk of sounding pedantic, I wouldn't classify this situation as a failed completion, that to me would be when contracts have been exchanged but then completion has failed to take place. In this case contracts have not been exchanged and no legal contract agreement has been entered in to by either party. A target exchange (and simultaneous completion) date has been missed, that is all.

However, there remains the issue that you have an empty property that you wish to sell and a buyer who has now gone quiet. Probably the only course of action available would be to communicate to the buyer and their solicitor, via your solicitor and estate agent, that if you do not have a response by 'x' date that they are ready to exchange, then you will be forced to remarket the property.

Thank you. I didn't know how to refer to the missed exchange / completion so thank you for your insight.

Is it usual for AML / Source of Funds checks to be done at this stage as I was under the impression that a solicitor could not undertake work on a case until the regulatory checks had been satisfied? The solicitor also did the conveyancing for the property that the buyer sold so one would imagine some checks were made for that transaction.

We have considered that we may have to issue an ultimatum.

Thank you again.

It's not unheard of for AML checks/source of funds checks to occur at a fairly advanced stage of the transaction. it is possible the solicitor reviewed the file when they felt they were close to being ready to exchange and found the information they held was inadequate and more detail required.

It is also entirely possible that whilst there may well have been ID checks when the solicitor dealt with this persons sale, there will be other checks needed where a purchase is concerned. Let's say they sold a property for £100k, but are now buying one for £200k, the solicitor will need to do source of funds checks on where the additional £100k is coming from. In itself it doesn't confirm there's an issue.

Get the EA to seek further clarification from the buyer as to what is happening.

As for ultimatums, if you make one you've got to be prepared to follow through, otherwise they don't hold any weight.

user1977

It's not possible to complete all AML checks at the start of the transaction, as by definition the solicitor needs to be able to trace the funds all the way through to whenever they hit their own account - so at least some of the checks need to be done close to completion. The only checks which solicitors must do at the start are to check their clients' ID, not the source of their funds.

MillyMee

Surrey_EA said:

MillyMee said:

Surrey_EA said:

At the risk of sounding pedantic, I wouldn't classify this situation as a failed completion, that to me would be when contracts have been exchanged but then completion has failed to take place. In this case contracts have not been exchanged and no legal contract agreement has been entered in to by either party. A target exchange (and simultaneous completion) date has been missed, that is all.

However, there remains the issue that you have an empty property that you wish to sell and a buyer who has now gone quiet. Probably the only course of action available would be to communicate to the buyer and their solicitor, via your solicitor and estate agent, that if you do not have a response by 'x' date that they are ready to exchange, then you will be forced to remarket the property.

Thank you. I didn't know how to refer to the missed exchange / completion so thank you for your insight.

Is it usual for AML / Source of Funds checks to be done at this stage as I was under the impression that a solicitor could not undertake work on a case until the regulatory checks had been satisfied? The solicitor also did the conveyancing for the property that the buyer sold so one would imagine some checks were made for that transaction.

We have considered that we may have to issue an ultimatum.

Thank you again.

It's not unheard of for AML checks/source of funds checks to occur at a fairly advanced stage of the transaction. it is possible the solicitor reviewed the file when they felt they were close to being ready to exchange and found the information they held was inadequate and more detail required.

It is also entirely possible that whilst there may well have been ID checks when the solicitor dealt with this persons sale, there will be other checks needed where a purchase is concerned. Let's say they sold a property for £100k, but are now buying one for £200k, the solicitor will need to do source of funds checks on where the additional £100k is coming from. In itself it doesn't confirm there's an issue.

Get the EA to seek further clarification from the buyer as to what is happening.

As for ultimatums, if you make one you've got to be prepared to follow through, otherwise they don't hold any weight.

Thank you for your information about the checks. We believe that there are not additional funds required for this purchase and there is an excess of the buyers funds in the solicitors account.

The ultimatum is a tricky one, if we had an update from the buyers solicitor it would allay our fears and we could work to a new date. However our solicitor, the EA or even the buyer cannot get an update, which is a little worrying. 

Thank you once again, it is appreciated.