Found out house at risk of repossession 4 months after offer accepted

buddy2024

We are in the process of buying our first house which is chain free because it was being rented out to tenants. The tenants moved out a couple weeks ago and the house is now empty/vacant.

We are 4 months into the house buying process and the sellers solicitors have not been fast with responding to enquiries and have been delaying the process. This week we received an email from the estate agent which said the seller needs to complete within 1 week or the house will be repossessed (literally word for word what the email said).

This is the first time we have been told the house was at risk of repo so were in shock and stressed!

We haven't even exchanged contracts yet and still have unanswered enquiries. So there is no way we would completed within 1 week.

We are concerned that the estate agent/seller has withheld this repo infomation. Do we have any grounds to report them to trading standards? I know they should inform buyers about issues with house structure/land but I couldn't find anything on repo. As we have already spent money on a survey and solicitors fees which would be lost if it got repossessed and we couldn't buy it from the lender.

user1977

What are your solicitors saying?

anselld

Assuming the seller is motivated to answer the remaining enquiries why should it not complete within 1 week?

Surely at 4 months in it should be very close.

Hoenir

Vendors have no obligtion to disclose their personal affairs or circumstances. The vendor's solicitors probably aren't keen on racking up time on their client's affairs (that they well not get paid for) hence the lack of haste. Completion within a week suggests reposssession proceedings is now well advanced and the lender has lost patience. 

buddy2024

anselld said:

Assuming the seller is motivated to answer the remaining enquiries why should it not complete within 1 week?

Surely at 4 months in it should be very close.

Yes it is close but we have only just received an estate management pack from the seller this week which my solicitor has reviewed the next day and now has more enquiries. One being the seller has not paid any of the estate management fees.

As I said, the sellers solicitor is very slow and does not answer enquiries quickly. My solicitor has sent the same enquiry multiple times and had to explain to them how to find out the answer.

buddy2024

user1977 said:

What are your solicitors saying?

Waiting for a response from them about trading standards. But she has said that she doesn't have much experience with repo.

We are also waiting to see if the seller can get an extended grace period to complete the sale. The estate agent emailed to say they have got a grace period but the seller doesn't know for how long. Which makes no sense because surely a lender would specify the time limit.

Peter999_2

The estate agent must disclose it to you if the property is in danger of being re-possesed and must tell you at the beginning (see - Agents' duty of disclosure – What to do when you are asked to 'hide' a repossession - Property Industry Eye)

However, if they genuinely haven't been told by the vendor that it is at risk then obviously they can't tell you and it's not their fault.      When I worked for a bank we really really hated re-possessions as they were a pain the backside for us - banks really don't want property on their hands.   We would have been happy to wait a bit (so long as this was confirmed by a solicitor that the sale was very nearly complete).

However, to be honest, in your shoes I would be suspicious.   If they have got themselves in such a state (not telling the EA about the repossession) and haven't paid the management fees then what else are they hiding and are they an irresponsible person.   What other debts have they got - how many people will be knocking on your door looking for money (obviously you wouldn't have to pay it but it's a pain).

If this is your "forever" house and you really want it then that is different of course.  Just let them speak to their mortgage provider and see if they can get an extension if you can't complete earlier due to their solicitor being slow.

eddddy

buddy2024 said:

user1977 said:

What are your solicitors saying?

Waiting for a response from them about trading standards. 

I doubt that your conveyancing solicitor is particularly experienced in the Consumer Rights Act 2015, or making complaints to Trading Standards.

But in any case, assuming the estate agent is a member of the Property Ombudsman Scheme (most are), you should complain to the estate agent and then the Ombudsman - not to Trading Standards.


Briefly,

• if the estate agent has failed to disclose material information to you, they've breached the Consumer Rights Act.

• if you've suffered a financial loss as a result of that failure, the ombudsman can order the estate agent to pay you compensation

So for example

• If the estate agent failed to tell you about the pending repossession

• and if the estate agent had told you, you (or a reasonable person) wouldn't have proceeded

• and the sale falls through as a result of the pending repossession

• Then the Ombudsman might award you your lost legal fees, mortgage application fees, survey fees, etc

But you would need to convince the Ombudsman of the above.

RHemmings

I second the recommendation to have a look at making a complaint to The Property Ombudsman Service if the EA in question is a member. However, they might be a member of The Property Redress Scheme. Which in my personal opinion appears to not protect customers of EAs as well as TPOS. 

If the property is repossed, then the mortgage lender will almost certainly sell it again. However, that doesn't mean that your offer will just transfer over. The mortgage lender is bound to obtain the best possible price for the property. Which may, or may not, mean putting it on the open market again. If it does go on the open market again then you can offer again, or bid if it's sold by auction. 

It could be that the completion within one week claim is not the only solution. You could always reply that you are prepared to speed up the sale but that you certainly can't complete in one week. That gives the seller the chance to propose something different. If they can. 

user1977

buddy2024 said:

user1977 said:

What are your solicitors saying?

Waiting for a response from them about trading standards. But she has said that she doesn't have much experience with repo.

We are also waiting to see if the seller can get an extended grace period to complete the sale. The estate agent emailed to say they have got a grace period but the seller doesn't know for how long. Which makes no sense because surely a lender would specify the time limit.

I would take any sort of "legal" info/advice from the EA with a sack of salt. Does the "one week" deadline literally mean there's a court-ordered eviction already set for that date? I suspect not. Repossessions typically involve a lengthy succession of "deadlines", and if the lender is told that there's a buyer in the wings they're more likely to hold off, rather than suffer the delay/risk of actually taking possession themselves and trying to find a buyer.

There's certainly no point worrying about the "withholding of information" claim potential until you've actually suffered a loss.

SDLT_Geek

Has your solicitor checked with the seller that they will have enough funds at completion to repay the mortgage debt secured on the property as well as outstanding estate management charges?

If not then the seller will not be able to deliver good title at completion and your purchase will stall.