2% Deposit?

Tozer

Is there a long-stop date by which completion MUST occur?

SquatNow

Tozer wrote: »

Is there a long-stop date by which completion MUST occur?

There will be... the mortgage offer will expire if the sale doesn't complete by a certain date.

This fact is the black swan in the stalled housing market.

People have got mortgage offers, built up chains and are waiting for the chains to be complete so everyone can move. But if ALL the sales can't be completed by a certain date, someone, somewhere in the chain will have their mortgage offer expire. When they come to renew it they wont get as good a deal and wont be able to afford it... and will pull out and the chain will collapse.

All those houses with "sold" signs on... they are all stuck chains. once the chains collapse everyone in the chain will need to start again... and with even fewer buyers in the market, and with people mortgages deals being worse than before (giving them less to spend), prices will, quite literally, fall off a cliff.

Muppit_2

Squatnow - Ok, Ill consider it, but I actually like where I live - its a much better location than where I am moving to actually, its just tiny and we need more space (for our sanity).

Tozer - Theres a completion date, if vacant possession is not obtained by that date, then either party may rescind the contract by giving 5 working days notice. Which basically means, if the tenants dont leave, we can decide to pull out at no penalty, or continue to wait until the landlord evicts them before proceeding with the purchase.
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puddy

i dont understand this deposit business. ive only bought one flat and thats the one im living in now. i dont remember handing over a deposit when i bought it although i had a 10% deposit, i remember the estate agent asking me how much i had but dont remember giving it to anyone? i suppose i must have done at some point, when would this have been?

im selling my flat now, next week it goes 'live',, the deposit for the next property will be about 50% but is tied up in the value of this property, how does that work?

SquatNow

Muppit wrote: »

Squatnow - Ok, Ill consider it, but I actually like where I live - its a much better location than where I am moving to actually, its just tiny and we need more space (for our sanity).

You've got a buyer. They are like hens teeth. If you lose your buyer you are unlikely to find another, certainly not at the current price. If you drag it out too long, your buyer will lose their mortgage offer, and they are unlikely to get another one, certainly not at their current terms.

If you want to move in the next couple of years, you have to do it NOW.

silvercar

I think you are worrying unnecessarily. Until you have exchanged anything can happen and deals and chains fall apart. Once you have exchanged, (and everyone in the chain exchanges at the same time BTW) people don't back out as they have too much too lose. This means that before exchange occurs solicitors check that everyone has a mortgage offer that is not going to expire before completion and that the deposits are all agreed and passed along the chain.

Generally failing to complete after exchange means the person failing to complete is liable for the full 10% deposit and costs incurred by the other party. So if the property then sold for less the buyer failing to complete could be liable for the difference.

Once you have exchanged it is pointless worrying, the only time that deals fall apart between exchange and completion are if one of the parties dies or goes bankrupt. Very, very occasionally there are other reasons but these are so few and far between there is little point dwelling on it.

Deposits are usually passed up the chain, so you receive a deposit from your buyer and pass that plus a bit more upto your seller. If people can't manage 10% sellers generally accept less.

PasturesNew

Muppit wrote: »

The seller refused to give his tenants 2 months notice until we had exchanged contracts. We couldnt proceed with the sale if we didnt accept these terms. So we had a condition put in the contract so that we exchange contracts, then he gives his tenants notice, then when the tenants move out (could be two months), we would then complete.

The tenant is legally entitled to two full months' notice from the next rent date.

If, say, his rent date was 1st of the month and the landlord gave him notice on, say, the 4th of June, then that wouldn't even start the two months' notice until the next rent date. i.e. 1 July. So the tenant would have until 31 August to continue living there.

The landlord can't just give two months' notice from any date.

So watch that and check.

Muppit_2

Thanks PasturesNew, we were aware of that fortunately, and have been beavering away to get this all finished this week. If we cant get it sorted, that would effectively be 3 months between exchange and completion - in other words, a nightmare. Ty for the peice of mind Silvercar, I think you're right, the solicitor will be able to sort out this deposit issue for us. Squatnow - If the buyer at any time were to say it was unacceptable, we would obviously discuss solutions, but as the buyer also wanted time between exchange and completion - its really suited them also.