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Sad if true,

I'm always skepticle of situations where people claim they "had" to do something, or were forced to do something. Often it is only partially true. 

"I had to quit my job because I couldn't organise child care for 1 day"
"I had to buy a new £60/m phone because mine broke"
"I couldn't take that job because the bus doesn't go there" (fails to consider walking 0.25 miles from the nearest bus stop)

Whether there was any way of salvaging the deal/delaying rather than blowing them up by pulling out who knows. 

 

 

 

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I saw that.

Sales failing after transaction are rare to the point of never happening.

A couple in Reading found themselves in exactly this nightmare, after their buyer’s lender withdrew a mortgage offer after contracts had been exchanged.

Abdus explains: “Our seller was still insisting on us paying our 10% deposit, so we had to insist on our buyer also paying their 10% deposit to us. Unfortunately, our purchase price was double our sale price. So our buyer must pay us £33,000 and we must pay £66,000 to our seller – so we both lose £33,000 for nothing. This money is all our savings from the past seven years. Our account’s empty. We are devastated by this – we have an eight-month old baby, but now we are just too sad.”

 

https://www.theadvisory.co.uk/conveyancing/exchange-and-completion/#anchor-1

 

What is exchange?

At exchange:

Both parties’ solicitors are in possession of a signed contract

The seller’s solicitor also holds the signed transfer of title deed (TR1 form)

The buyer’s solicitor is in possession of cleared deposit funds, a mortgage offer and buildings insurance policy, if required

A completion date has been agreed

At the point at which the solicitors confirm with each other they hold all the legal documents required for the transaction to complete, they ‘exchange’ contracts (usually over the telephone) the transaction becomes legally binding.

 

So, hes buying a ~660k house but has very little spare cash????

Breaking the contract means he can pursue the buyer for costs -thats 66k.

I cant see a solicitor exchanging without guaranteed mortgage offer.

Or a bank withdrawing the mortgage - unless there was fraud.

 

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I saw that.

Sales failing after transaction are rare to the point of never happening.

A couple in Reading found themselves in exactly this nightmare, after their buyer’s lender withdrew a mortgage offer after contracts had been exchanged.

Abdus explains: “Our seller was still insisting on us paying our 10% deposit, so we had to insist on our buyer also paying their 10% deposit to us. Unfortunately, our purchase price was double our sale price. So our buyer must pay us £33,000 and we must pay £66,000 to our seller – so we both lose £33,000 for nothing. This money is all our savings from the past seven years. Our account’s empty. We are devastated by this – we have an eight-month old baby, but now we are just too sad.”

 

https://www.theadvisory.co.uk/conveyancing/exchange-and-completion/#anchor-1

 

What is exchange?

At exchange:

Both parties’ solicitors are in possession of a signed contract

The seller’s solicitor also holds the signed transfer of title deed (TR1 form)

The buyer’s solicitor is in possession of cleared deposit funds, a mortgage offer and buildings insurance policy, if required

A completion date has been agreed

At the point at which the solicitors confirm with each other they hold all the legal documents required for the transaction to complete, they ‘exchange’ contracts (usually over the telephone) the transaction becomes legally binding.

 

So, hes buying a ~660k house but has very little spare cash????

Breaking the contract means he can pursue the buyer for costs -thats 66k.

I cant see a solicitor exchanging without guaranteed mortgage offer.

Or a bank withdrawing the mortgage - unless there was fraud.

 

Informative response, thank you. 

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The sheer audacity.

It's down to the lenders and buyers/sellers to sort out. NOT tax payers!

Yeah I laughed at that bit. 

many of those will have exchanged long after it was a known issue to the normies. I.e mid-March

The logistics of such a scheme would also be impracticle, how do you seperate those who simply changed their mind/got cold feet from those who genuinely couldn't complete even after hitting up BOMAD, personal loans, friends, fools and bridging lenders to try and make it. 
 

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I saw that.

Sales failing after transaction are rare to the point of never happening.

A couple in Reading found themselves in exactly this nightmare, after their buyer’s lender withdrew a mortgage offer after contracts had been exchanged.

Abdus explains: “Our seller was still insisting on us paying our 10% deposit, so we had to insist on our buyer also paying their 10% deposit to us. Unfortunately, our purchase price was double our sale price. So our buyer must pay us £33,000 and we must pay £66,000 to our seller – so we both lose £33,000 for nothing. This money is all our savings from the past seven years. Our account’s empty. We are devastated by this – we have an eight-month old baby, but now we are just too sad.”

 

https://www.theadvisory.co.uk/conveyancing/exchange-and-completion/#anchor-1

 

What is exchange?

At exchange:

Both parties’ solicitors are in possession of a signed contract

The seller’s solicitor also holds the signed transfer of title deed (TR1 form)

The buyer’s solicitor is in possession of cleared deposit funds, a mortgage offer and buildings insurance policy, if required

A completion date has been agreed

At the point at which the solicitors confirm with each other they hold all the legal documents required for the transaction to complete, they ‘exchange’ contracts (usually over the telephone) the transaction becomes legally binding.

 

So, hes buying a ~660k house but has very little spare cash????

Breaking the contract means he can pursue the buyer for costs -thats 66k.

I cant see a solicitor exchanging without guaranteed mortgage offer.

Or a bank withdrawing the mortgage - unless there was fraud.

 

Good points. I don’t mean to ignore your points because they are of course true, who buys £660k with a £66k deposit and has no other money for say carpets etc.

Anyhoo....just the very simple maths ignoring the ability to sue, surely if they had a £66k deposit and collected a £33k deposit from their own buyer....and the sale falls through...then they don’t have ‘no savings and empty accounts’ they have ‘less savings’ because they still have their buyers deposit. 

Doesn’t mean this situation isn’t possible and losing a deposit would be a nightmare...it’s just the over sensationalise media approach makes it all very boring.

The reality is and the way this is generally avoided is you exchange and complete very shortly afterwards (ie a week, not 3 weeks)....and during that period everyone keeps very quiet about any issues arising. Eg ‘my job is now under review’ doesn’t mean ‘I have just lost my job’ etc  

 

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I am a bit ignorant on this but what do you mean by a lost deposit?

As in if the mortgage company backs out the buyer loses their deposit? Who keeps the deposit then after this?

Appreciate someone clearing this up for me.

If you have exchanged the 10% is paid by the buyer and contract drawn up to complete on a date. Legally binding.

If the buyer can’t complete the seller keeps the deposit. So this is very rare  

As an aside, and even more rare is if the seller tries to back out then buyer gets the deposit back and the buyer also sues for costs and breach of contract....and could even enforce the contract. 

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If you have exchanged the 10% is paid by the buyer and contract drawn up to complete on a date. Legally binding.

If the buyer can’t complete the seller keeps the deposit. So this is very rare  

As an aside, and even more rare is if the seller tries to back out then buyer gets the deposit back and the buyer also sues for costs and breach of contract....and could even enforce the contract. 

Thank you for clarifying.   That makes sense.

You sign a contract without confirming you could fulfil it - tough.

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Thank you for clarifying.   That makes sense.

You sign a contract without confirming you could fulfil it - tough.

It wouldn't be such a problem if house prices and their implications weren't so big. They'd be absorbable risks.

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I don't understand how this is possible. Is it not standard that everyone exchanges contracts simultaneously and completes at the same time - and hence the mortgage is in place from that moment? 

Certainly thats what happened when I bought my house, and I would not have agreed to any delay between exchange and completion because of the risk with deposits.

Edited by MancTom
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I don't understand how this is possible. Is it not standard that everyone exchanges contracts simultaneously and completes at the same time - and hence the mortgage is in place from that moment? 

Certainly thats what happened when I bought my house, and I would not have agreed to any delay between exchange and completion because of the risk with deposits.

It's standard at the moment due to covid but usually there is a week or two between exchange and completion.

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You've all misunderstood the problem. 

They had a mortgage offer. They exchanged.  Solicitor ordered the money for the completion date the following Friday.  

Then the mortgage company didn't send the money. And instead said they were pulling the mortgage. 

That was the problem. 

(Sue the mortgage company? you're having a laugh). 

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I don't understand how this is possible. Is it not standard that everyone exchanges contracts simultaneously and completes at the same time - and hence the mortgage is in place from that moment? 

Certainly thats what happened when I bought my house, and I would not have agreed to any delay between exchange and completion because of the risk with deposits.

 

 

Never heard of this.

Its is possible. But its very very very unlikely.

Any half competent solicitor is going to make sure the mortgage offer is 110% sure.

The time between exchanging contracts and completing used to be very short - days, just allow seller n buyer to handle last minute hiccups.

I dont believe the claim that 10% of sales are failing after exchanging and completing. Its just not credible.

I can only htini it involes a vey weird and specialist banks whos lending to people they should not lend to.

 

 

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.

I can only htini it involes a vey weird and specialist banks whos lending to people they should not lend to.

 

 

That's pretty much what the govt want to promote, with all its wheezes and props, surely (?).

But of course there's no risk at all, not like a pandemic could come along and shut down the economy....

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That's pretty much what the govt want to promote, with all its wheezes and props, surely (?).

But of course there's no risk at all, not like a pandemic could come along and shut down the economy....

Pols might spout that - and theres no bigger BS spouting Pol than Kevin Hollinrake.

However ...

to be more than hot air they have to actual put something out.

Bar HTB, its all been slapped down by Treasury and/or BoE.

The future of UK housing is people buying housing at LV under 4 and paying back the capital with a plain vanilla repayment mortgage  over ~25 years.

 

 

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Its is possible. But its very very very unlikely.

Any half competent solicitor is going to make sure the mortgage offer is 110% sure.

The time between exchanging contracts and completing used to be very short - days, just allow seller n buyer to handle last minute hiccups.

I dont believe the claim that 10% of sales are failing after exchanging and completing. Its just not credible.

I can only htini it involes a vey weird and specialist banks whos lending to people they should not lend to.

 

 

+1  This has never been a major problem, even with other economic shocks.

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