How did this happen? Buyer had a conditional mortgage, discovered 3 day before exchange!

honestjoe224

This has cost us around £10,000 and we cannot understand how it happened or what we can do to recover the loss if anything at all is possible.

September 2024, viewing and initial offer to buy from a UK resident from Bulgaria and his wife. 
EA confirmed they had a mortgage offer and the cash was in place to complete the transaction.

We made offer on house to buy, we had mortgage and cash from sale of our house to complete, hopefully before Xmas since our sale was to first time buyer and house we were buying was chain free.

All went well, particularly with our purchase, then things seemed to slow, the conveyancers of our buyer were changing the person in charge of account several times and each time involved resubmitting everything!

Our purchase was ready to exchange but the sale ran into silly enquiries, questions relating to planning 20 years prior to the entire estate being built. Replied, then nothing then repeated. We got nowhere!

Then in February 2025, we found out the issue, the buyer himself told us, he had his name on his brothers mortgage and the mortgage offer that his broker had got from Halifax to buy ours was conditional on him being released from his brothers mortgage. He assured us this was all agreed and would be complete in 14 days. Nobody had explained to him that he must sort this prior to completing the purchase.

Then the mortgage lender to him and his brother refused to release him, killing the entire transaction!

We chased the EA, asking why they made the purchase offer, they replied stating that the mortgage broker had told them that the mortgage was approved and that was accepted so they issued the offer. The buyers conveyancer, a 'tick box' firm said nothing and the deal progressed but of course they couldn't draw down the funds. They apparently stalled waiting for the condition to be removed, we knew nothing, our conveyancers were pressing but getting more concerned about the deliberate blocking. 

The buyers conveyancers and the mortgage broker both would have known the mortgage was conditional, we feel the EA may have known but cannot see why they would not have cancelled the offer.

Result is the entire deal is dead, we have the legal fees, around £2,700 to pay our lawyers, the time delay has pushed any sale we make now into the new LDST regime costing us over £6,000 and our buyer had offered to buy some furniture which we had bought new ready to move days later, around £1,500 worth that we do not now need!

The original offer to buy our house should never had been made, the broker never had a clear mortgage offer and the conveyancers processed the transaction for months saying nothing!

To make life more complex the house we were buying is now under offer to another buyer and we had packed almost everything ready to move a few days after exchange. Changing estate agents is impossible, new photos etc wouldn't be possible without unpacking and repacking, a massive job.

Any ideas would be welcome - it is an impossible nightmare that never should have happened but we do not seem to be able to take action against anyone!

Sorry this is so long, very complicated! 



  

DullGreyGuy

You hadn't exchanged contracts so nothing is owed by anyone as they could have simply pulled out as a change of mind.  Welcome to house buying/selling and why some conveyancers make a big deal about not charging you for your second attempt if the first one falls though. 

I know when we got our decision in principle, which was used for the offer, it was a straight yes with a potential lending notably above what we needed. When the actual application came about the bank asked us to pay off a debt. Wasnt a problem for us, sorted in a few days, doubt very much that the vendors were informed. 

Hoenir

Seems there were plenty of red flags waving well before the crunch. Whatever the potential purchaser was trying to do was problematic. Hence their conveyancer's delaying matters with spurious enquiries.

A lesson I learnt many years ago is that people are sometimes far from truthfull. Be prepared to relist the property and don't be swayed to give someone just a little more time. 

EssexHebridean

Next time, once you have accepted the offer, get your solicitor to ask the buyer's solicitor specific questions about the buyer's mortgage offer. Always safer getting this sort of information established by solicitors rather than agents. 

Good luck with finding a new buyer and somewhere to purchase. 

Hermann

The main issue here I'm afraid is your own misunderstanding of the process.

You've committed far too much decision making and spending in advance of the exchange of contracts.

Nothing is enforceable unless a signed legal agreement is in place.

Also consider never taking an EA or solicitors comments as an accurate statement of fact but always as for a copy of any correspondence and check through it yourself.

This is even true of the contract itself. The conveyancer does not send you a document telling you to just sign it. They are sending you a document to check through and confirm it meets your requirements and expectations and then sign to confirm.

anselld

You can insure against failure to complete which would have protected your legal costs but not any additional spending you have chosen to make nor legislation changes.

comeandgo

I never entertain a first time buyer, they are far too risky.  

Larac

comeandgo said:

I never entertain a first time buyer, they are far too risky.  

I recently went to BAFO and lost as the Vendor chose a FTB over me as I had a small chain.  The issue for the Vendor will be if the mortgage company down value as everybody had to offer more.

FlorayG

I don't have any useful advice to offer, just my sympathy, I have a good friend who similarly lost a house at the last minute and it cost her thousands and there was nothing she could do about it. Until you have that exchange of contracts done you're on a string that can break at a moment's notice

newsgroupmonkey_

comeandgo said:

I never entertain a first time buyer, they are far too risky.  

Yeah. Let yourself get ina position like the fella on the other thread whereby the person at the bottom of the chain is an old fella now in hospital and has no available funds. Each buyer up the chain is potentially going to have to frustrate the contract and pay each other 10%. There are no guarantees that the next person down the chain actually has any money. You can take them to court, but there's no guarantee you'll get anything. At least a FTB has the cash in hand.

I look at everything. In our last purchase, the lady we bought off was getting off the ladder. The lady buying our property was a FTB.

Being virtually chain free was an absolute blessing.

ReadySteadyPop

Larac said:

comeandgo said:

I never entertain a first time buyer, they are far too risky.  

I recently went to BAFO and lost as the Vendor chose a FTB over me as I had a small chain.  The issue for the Vendor will be if the mortgage company down value as everybody had to offer more.

Yes that is a risk.