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  • FIRST POST
    • ldn1
    • By ldn1 7th Aug 18, 9:10 PM
    • 5Posts
    • 1Thanks
    ldn1
    Ex-LA Retention - urgent HELP needed for FTB please!
    • #1
    • 7th Aug 18, 9:10 PM
    Ex-LA Retention - urgent HELP needed for FTB please! 7th Aug 18 at 9:10 PM
    Hi - I've been a member for sometime but haven't posted before. I've trawled the forum archives but couldn't find a specific answer to my question ... apologies if I've missed it!

    This is somewhat of a long saga / ordeal but I'll give you the cliff notes version.

    I'm a first time buyer and have finally got the savings and financing in place to buy a place... which has taken some time as the bank of mum and dad wasn't really an option for me.

    The place I had an offer accepted on (4 months ago!) is an ex-LA flat. I was told by the agent that the seller was a little unstable and had previously pulled out of a sale (at a higher price) just before exchange of contracts!

    Long story short, I've done a lot of due diligence with my solicitor over the past few months and there is a large (c. 10k) FUTURE major works estimate in the pipeline (no S.20 served yet) and it appears that the seller made alterations to the property without seeking approval of the freeholder, essentially the seller is in breach of the lease.

    I have my heart set on the property and have accepted the above issues on the basis of a 10k reduction of the purchase price. This would leave me liable for the FUTURE major works bill and to seek retrospective approval of the alterations she has made. I've had a trades person I trust inspect the property and am aware of what remedial work will be needed to get retrospective approval.

    The seller agreed to the reduction and I thought all was well, we were due to exchange contracts last week.

    Surprise, surprise but history appears to be repeating itself a few days before exchange of contracts!!! The seller is now saying that they want to move into the property themselves. It's currently empty, the seller used to rent it out but currently no tenants.

    The crux of it seems to be that she is now not happy with the retention my solicitor is asking for with respect to PAST major works.

    The council have confirmed the range these will be in (3k-4k) but have not issued the final bill for this as yet.

    VERY VERY reluctantly I've decided that I will cover the past major works bill too in order to get this done and over the line!

    I feel like I'm being pulled over a barrel given I am eager to exchange asap!

    So here's the question, my solicitor is telling me that this essentially amounts to an increase in the effective sale price and that i should have the sale price increased (i.e. inform the lender etc.) and then request a retention from the higher sale price.

    This seems like a very clunky way to deal with the issue and I'm wondering whether there is another way to solve this i.e. provide an undertaking as part of the contract that I will assume liability for settlement of the PAST major works account?

    I appreciate that the local authority will require full and final settlement of the major works bill prior to approving/formalising the transfer but surely an undertaking provided by me that I will pay this should be sufficient? I'd even be happy to provide payment upfront for the major works bill to be held by my solicitor should this be required.

    Ordinarily, I would be minded to push back on this point but given the stage we're at, added to the erratic vendor - if there is a chance to exchange contracts sooner rather than later - i'd prefer to do that!

    The alternative is to go back to the bank (yet again) to make another change to the mortgage offer which adds an extra element of risk and delay!

    ANY advice would be gratefully received. Apologies it this post is a little long winded and ranty!

    Thank in advance!
Page 1
    • cooltt
    • By cooltt 7th Aug 18, 9:25 PM
    • 606 Posts
    • 366 Thanks
    cooltt
    • #2
    • 7th Aug 18, 9:25 PM
    • #2
    • 7th Aug 18, 9:25 PM
    Your solicitor is simply acting with due diligence and covering their butt, however you are correct, there is no reason why you can't draw up a clause to resolve the issue as you have said, you will pay.


    You are paying the solicitor and they can't provide a sound legal argument, inist they carryout your wishes.
    • ldn1
    • By ldn1 7th Aug 18, 9:39 PM
    • 5 Posts
    • 1 Thanks
    ldn1
    • #3
    • 7th Aug 18, 9:39 PM
    • #3
    • 7th Aug 18, 9:39 PM
    Thanks cooltt - that's reassuring to hear!
    • Hoploz
    • By Hoploz 7th Aug 18, 9:39 PM
    • 3,842 Posts
    • 3,386 Thanks
    Hoploz
    • #4
    • 7th Aug 18, 9:39 PM
    • #4
    • 7th Aug 18, 9:39 PM
    It might be the lender requiring the retention for thenpast works, in which case you would need to do it the way they are happy with.

    Frankly my gut reaction is I would be put off buying this place as it has had two lots of major works so far in the story ... How much will you be expected to cough up during your ownership? I wouldn't be buying in this block.
    • Cakeguts
    • By Cakeguts 7th Aug 18, 10:29 PM
    • 5,336 Posts
    • 8,134 Thanks
    Cakeguts
    • #5
    • 7th Aug 18, 10:29 PM
    • #5
    • 7th Aug 18, 10:29 PM
    I wouldn't buy this flat either. I can't see why you would want to pay for something in the past and something likely to come along? Does the flat seem to be cheap for what it is? If so then that is because there are lots of repairs being done on the block and so you are going to be hit with some big bills.


    Is your solicitor absolutely sure that this person owns this flat and that it doesn't still belong to the council?
    Last edited by Cakeguts; 07-08-2018 at 10:31 PM.
    • ldn1
    • By ldn1 7th Aug 18, 10:30 PM
    • 5 Posts
    • 1 Thanks
    ldn1
    • #6
    • 7th Aug 18, 10:30 PM
    • #6
    • 7th Aug 18, 10:30 PM
    Thanks Hoploz - that was my initial thought too but I've been through the mortgage offer with a fine tooth comb and there are no specific (or even general) clauses that appear to countenance this.

    The only exception to this comes down to.... does my agreement to pay the historic major works bill amount to an increase in the purchase price.

    i.e. by me agreeing to take on the vendors liability, I am effectively paying the vendor more money and therefore counts as a change in the purchase price and would then need to be disclosed to the lender.

    The counter argument to this is that as Major Works bills are treated in much the same way as service charges, this would be similar to buying a property with service charge arrears and therefore not necessarily an increase in the price of the underlying property. Obviously, this entails the freeholder (LA) being satisfied that the historic account will be paid on demand by the new leaseholder.

    This is a grey area for me, and why I guess I'm asking the question,
    Last edited by ldn1; 07-08-2018 at 10:34 PM.
    • AFF8879
    • By AFF8879 7th Aug 18, 10:56 PM
    • 416 Posts
    • 1,049 Thanks
    AFF8879
    • #7
    • 7th Aug 18, 10:56 PM
    • #7
    • 7th Aug 18, 10:56 PM
    Having bought my own flat in London a couple of years ago I know how difficult the process can be (and I was buying in a private block!) and how you can become emotionally invested in a property. However you seem in a rush and I would suggest you slow down and ask yourself two questions:

    - are there any other flats (ex-LA or otherwise) in your price range within the same wider area? If so, why not view those given the disaster the current one has turned out to be?
    - if not...ask yourself why that might be!

    I really understand the desire (sometimes desperation) to get on the property ladder, especially in London, but this is the biggest financial decision you will probably ever make - if there is any hint of possibly unlimited future maintenance liabilities I would really think long and hard about whey it is the right flat for you.

    You may have budgeted for the upcoming work but what happens in 6 years time when the LA want 7k from every leaseholder to replace the Lifts? Or 15k to re-render the building?

    This is not even considering the behaviour the seller. She is the EAs client, so if even they feel the need to warn you that speaks volumes!
    • Cakeguts
    • By Cakeguts 7th Aug 18, 11:15 PM
    • 5,336 Posts
    • 8,134 Thanks
    Cakeguts
    • #8
    • 7th Aug 18, 11:15 PM
    • #8
    • 7th Aug 18, 11:15 PM
    I don't think that the seller is going to sell you this flat. It seems to me that they have marketed it for some reason that only they know but without the real intention of ever selling it. They may be trying to get a sale valuation of it for some reason. The fact that they have withdrawn it from sale once and are intending to do it again with you makes me think that they are not in fact interested in selling it.
    • ldn1
    • By ldn1 9th Aug 18, 12:04 AM
    • 5 Posts
    • 1 Thanks
    ldn1
    • #9
    • 9th Aug 18, 12:04 AM
    • #9
    • 9th Aug 18, 12:04 AM
    @AFF8879 - this has been a genuine consideration and something I have thought about at length... the property could end up being a absolute money pit! I guess thatís one of the reasons you pay c. 30% below what a private equivilant costa in the area! I do still worry about it!

    @cakeguts - I do get the sinking feeling that Iím being messed about! Itís been over 4 months that this ordeal has gone on. Iíve seen a couple of places come and go in the local area that I could have offered on which is frustrating.

    The vendor STILL canít make her mind up and Iíve given them the next 24 hours to decide. Iíve seen another place I like and will put an offer on the other place if they canít exchange by the end of this week.

    On the increase purchase price point in my original post .. does anyone have any other views on this?

    This will be what Iíll need to agree with my solicitor should this go ahead. Thereís also a (very slight) stamp duty impact of counting foregoing the rentention as an increased sale price so just want to clarify!

    Many thanks again!
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