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    • boss13
    • By boss13 9th Aug 18, 3:08 PM
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    boss13
    Buying a P/X'd house
    • #1
    • 9th Aug 18, 3:08 PM
    Buying a P/X'd house 9th Aug 18 at 3:08 PM
    Very long time reader and lurker. First of all thank you to all the contributors and experts who have shared knowledge which has made interesting reading for me over the past few years.

    We are in the process of buying a property which the current owners have part-exchanged with a specialist P/X company in order for them to move in to retirement accommodation.

    Mortgage has been agreed and solicitor now in receipt of the offer.
    Issue is that the selling party (the external company, who I have been told have Power of Attorney) are not yet the legal owners (not sure if they are ever going to be). Does my lender not need to know this? I just sense there are a few complications about to come about and quite nervous about it all.

    I also read before that there is a 6 month rule on buying a house previously sold (although now that we have the offer, maybe we are safe of that).

    Any advice or guidance about what I can expect, and the key question for me is to find out what is the mechanism of the purchase and sale of the PX companies? Their solicitors seem to be slow to answer this right now!
Page 1
    • davidmcn
    • By davidmcn 9th Aug 18, 3:34 PM
    • 8,742 Posts
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    davidmcn
    • #2
    • 9th Aug 18, 3:34 PM
    • #2
    • 9th Aug 18, 3:34 PM
    The lender shouldn't have a difficulty - see this recent thread discussing part-exchanges and the six month rule:


    https://forums.moneysavingexpert.com/showthread.php?t=5861396
    • boss13
    • By boss13 10th Aug 18, 9:51 AM
    • 4 Posts
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    boss13
    • #3
    • 10th Aug 18, 9:51 AM
    • #3
    • 10th Aug 18, 9:51 AM
    Speaking to my solicitor today he is saying the issue is that if the PX Company bought the property for less than I have, the lender may not be happy with that as it would leave us open to claims from the original owners if they went bankrupt in the future! Anyone heard of anything like this!??
    • eddddy
    • By eddddy 10th Aug 18, 10:31 AM
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    eddddy
    • #4
    • 10th Aug 18, 10:31 AM
    • #4
    • 10th Aug 18, 10:31 AM
    Speaking to my solicitor today he is saying the issue is that if the PX Company bought the property for less than I have, the lender may not be happy with that as it would leave us open to claims from the original owners if they went bankrupt in the future! Anyone heard of anything like this!??
    Originally posted by boss13
    I don't think you've got that quite right.

    I think the risk is that the builder sells you the house under market value (i.e. less than they paid for it), then the builder goes bankrupt.

    The builder's creditors could insist that the sale is undone, so that the house can be resold at full market value - so the creditors get more of their money.

    This could happen for up to 5 years after you've bought the house - so I guess your solicitor is informing you of the risk.

    BUT....

    If the house has been advertised on the open market, and yours was the best offer, I think it would be hard for anyone to argue that it is not being sold at market value. (Even more so, if the bank's valuer confirms its value.)

    AND...

    You can get 'Insolvency Indemnity Insurance' to cover your costs/losses should this happen. (Your mortgage lender might insist on this.)
    • davidmcn
    • By davidmcn 10th Aug 18, 10:36 AM
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    davidmcn
    • #5
    • 10th Aug 18, 10:36 AM
    • #5
    • 10th Aug 18, 10:36 AM
    I think the risk is that the builder sells you the house under market value (i.e. less than they paid for it), then the builder goes bankrupt.

    The builder's creditors could insist that the sale is undone, so that the house can be resold at full market value - so the creditors get more of their money.
    Originally posted by eddddy
    I suspect what the solicitor was thinking was that if the transfer from the previous owners to the builders was at undervalue, and they were actually insolvent at the time, then that transfer might be challenged by their creditors.

    Which is theoretically true, but:

    1. the property is unlikely to have been sold at less than an open market value (unless the OP knows otherwise?), and anyway
    2. if someone is insolvent they're hardly likely to be buying a newbuild house!

    So solicitor is either daft or trying to sell them an overpriced insurance policy they don't need.
    • jennhg88
    • By jennhg88 10th Aug 18, 10:55 AM
    • 203 Posts
    • 156 Thanks
    jennhg88
    • #6
    • 10th Aug 18, 10:55 AM
    • #6
    • 10th Aug 18, 10:55 AM
    Speaking to my solicitor today he is saying the issue is that if the PX Company bought the property for less than I have, the lender may not be happy with that as it would leave us open to claims from the original owners if they went bankrupt in the future! Anyone heard of anything like this!??
    Originally posted by boss13
    It's quite normal for the PX price to be less than market value no?
    • eddddy
    • By eddddy 10th Aug 18, 11:01 AM
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    eddddy
    • #7
    • 10th Aug 18, 11:01 AM
    • #7
    • 10th Aug 18, 11:01 AM
    It's quite normal for the PX price to be less than market value no?
    Originally posted by jennhg88
    It depends. I'd say it's often the other way round.

    Builders do PX when their newbuilds are not selling so well.

    Discounting the price of their newbuilds looks bad for their image (and it shows up on LR sold prices).

    So they might prefer to 'overpay' for the PX house, rather than discount the price of their newbuild.
    Last edited by eddddy; 10-08-2018 at 11:03 AM.
    • jo03gra
    • By jo03gra 10th Aug 18, 8:39 PM
    • 21 Posts
    • 3 Thanks
    jo03gra
    • #8
    • 10th Aug 18, 8:39 PM
    • #8
    • 10th Aug 18, 8:39 PM
    We are currently a week or so away from exchanging contracts with a part x hub. This was mentioned to us via the solicitor just a few days ago. She was very concerned that the property had been sold within previous 6 months, due to money laundering and told us lenders will not offer a mortgage if a property has sold within the previous 6 months.

    It has all come back OK as its a developer buying and selling within the 6 months. Solicitor said she wouldn't raise this with our lender after checking a mortgage hand book.

    It doesn't matter if you have your offer in place, or if the property has been valued OK if the reason for resale isn't on the list of exemptions.

    I have to say, I hope you are doing better with the process of buying from a part x company, we've had a nightmare so far. They wont give us an inch!
    • boss13
    • By boss13 10th Aug 18, 10:11 PM
    • 4 Posts
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    boss13
    • #9
    • 10th Aug 18, 10:11 PM
    • #9
    • 10th Aug 18, 10:11 PM
    Well jo03gra, no - it has not been simple at all.

    Thanks for all the useful replies.

    I think the scenario referred to by the solicitor is as per davidmcn's post above. As my solicitor did mention that he may have to conduct bankruptcy searches (which now makes more sense to me!). The part ex company are very reluctant to release info on how much they have paid the current owners for it, but I think it is around 20k less than I am paying for it, so not greatly undervalue.

    The truth is that it is an elderly couple, who are moving to a retirement bungalow. So nothing sinister going on. I am now though worried about the 6 month mortgage rule and should the solicitor chose to inform the lender, I am hoping the whole thing does not fall apart. I will not be buying from a builder or developer themselves, it is a separate part exchange company (so not sure if that would count as on their list of exemptions). How do I find out what Santander's exact criteria is for this situation, as I cannot see it on their site!?
    • jo03gra
    • By jo03gra 15th Aug 18, 10:18 AM
    • 21 Posts
    • 3 Thanks
    jo03gra
    Hi Boss13, how is it all going?

    I'd be interested to know how you've found buying from a part x company.

    I read so often about people getting great deals, with huge discounts. We offered 5k less than the asking price and were flatly refused with no negotiation. It was full asking or they weren't interested in dealing with us. We should have walked away.

    But we knew there was a lot of interest in the property and it was probably being marketed slightly low, by maybe 5k.

    This company will give us nothing we request, such as gas boiler safety certificates etc.. They will not negotiate or be helpful at any stage. They have demanded so much from us from the outset, such as can we complete within 4 weeks....errr no! can we prove we have a good deposit, can we show them our mortgage redemption figures. I don't recall asking my buyers for any of this!

    We asked them at the point of offer to remove the carpets and soft furnishings from the house because the previous owner had lots of pets and it smells of urine This was a condition of our offer. They still haven't done this and now are saying they wont until after exchange. Also that they need a minimum of 2 weeks after exchange to arrange this They tell us this knowing we're in a small chain looking to complete within a week of exchange.

    Its been a nightmare to be honest and I'd never enter into buying from a company such as this knowing what I know now.

    But we wanted the house, and we've invested so much money into mortgage application, fees for this and that, not to mention emotional investment.

    Hope your experience is proving to be a better one.
    • boss13
    • By boss13 21st Sep 18, 6:19 PM
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    • 0 Thanks
    boss13
    In the end it all worked out! Sorry for the late update.
    The bank seemed to be satisfied in the end. The property did seem to be a reasonable price, but wouldn't say it was a bargain at all. Seems the company was interested in turning it around as quickly as possible.
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