Exchanged, and NOW the bank wants to down-value

[BettyNoMates]

Have NCed for this, and sorry for length.

Some 2-3 weeks ago our solicitor put the mortgagor bank straight about the number of years left on the lease (5 years' difference) (but still nowhere near a "bad" amount of time). Nothing happened between then and this past Wednesday, when our solicitor rang us in the morning to say that the last thing to sort out (nothing to do with the valuation) was done and we can exchange on the day, and did I want to? Of course I did! She spent some time on the phone with the bank, with the other side, etc, then rang me back in the afternoon to say they've exchanged, with completion set for later [this coming] week, i.e. 9 days later.

The next day our mortgage broker - who, frankly, has been useless so far - rang me with "good news" (he actually used those words). Since the bank has learned of the shorter-than-they-thought leasehold, they've down-valued the property, knocking £7k off the price, so we can go and negotiate a better price with the vendor. Errm, what?

My ghast being flabbered, I told him we'd already exchanged, and that the solicitor had been on the phone with the bank the previous day, and nothing was said about this, nor in any of the 2-3 weeks between when she told them about the fewer years and, well, this very phone call. He then gave me the big "assurance" - "I'll speak to my contact", etc. Next thing you know, I'm seeing emails where he's asking for us to be put onto a different product (since our LTV ratio is going to be different now).

He'd already told me that we have to give his contact 48 hours to reply before going over his head. What I should have realised is that's code for "we're not going to get any answer until Monday, at best". WE'RE DUE TO COMPLETE ON FRIDAY!!!

Our solicitor, meanwhile said that she's had one line in a fax from the bank, on Thursday afternoon, alluding to "an issue". That's it.

She's trying from her end, our mortgage broker is allegedly trying from his end, but we've gone from thinking we'll be able to move in from next weekend, to wondering if we're going to lose our deposit. We've been stressed and crying and snapping at each other and I burst into tears in the supermarket today. Are we in trouble? I mean, what's the worst that can happen? What's our redress? What can we demand? How should we handle this? Etc?

Finally, who is it likely is at fault?

[hohoho100]

Will the amount the lender is releasing going to change? I.e. have they said that as the value is reduced due to amount of lease left to run they are not prepared to loan the agreed amount. Sorry I'm not sure from your op.

If not then I wouldn't stress. If so are you able to raise the difference in funds so you can still complete? If not then you will be served a notice to complete if you can't complete on the agreed date and will ultimately lose your deposit.

Normally the mortgage offer will confirm the details of the lease as the lender has been provided details of (and made their valuation on this).If the lease details are different it is really down to the solicitor to make sure that the lender is happy to proceed and most lenders have a minimum term remaining that they will accept.

[hohoho100]

Also had your solicitor raised with you the lease term? Some lenders have issues with anything below 80 years and once it drops below this you will need to get a lease extension.

[AlpacaYourThings]

To be honest, your solicitor shouldn't have let you exchange without a revised mortgage offer from your lender factoring in the new term on your lease.

Personally, I would be having very stern words with the solicitor about this and pushing to know what they are going to do about it.

I am and that they have put you in this position.

[hohoho100]

Yes solicitors issue - you don't just advise that tje lease term is less you make sure they are happy to proceed before you ex.

[BettyNoMates]

Solicitor hadn't been told of any issues by either the bank or the mortgage broker. As far as I know.

[BettyNoMates]

All the noises I'm hearing from the mortgage broker is that we're trying to get the same amount of money, but since it'll be against a lower value property, our LTV is going to right out of the 75% that was part of the "product" we'd had. That said, that's what he's pushing for, but we don't know he'll succeed.

And, no, we absolutely do not have that kind of spare cash.

What I thought we might be able to do is - I read this a lot on the Property/DIY pages - would we be able to get the bank to require us to extend the lease term within xx months? Like they sometimes require people to undertake XX improvement works within XX time. Because we're planning to extend the lease anyway. It just wasn't higher priority than being able to afford to complete, IYSWIM.

[Quitelikely]

This is the very reason why solicitors in England usually complete and exchange on the same day! If you'd have done that then you would not be in the position you are now - a vulnerable one.

I'm actually wondering if when you advised her of the difference in lease time left if she advised the bank on that date or if she 'forgot' right up until after contracts had been exchanged?

You need to ask her if you can see the correspondence she forwarded to the bank informing them of this fact, if she states it was by telephone you need to ask who she spoke to and what date.

You then need to contact the bank to verify she was telling the truth. If she wasn't then she has been negligent and your costs should be recoverable.

[BettyNoMates]

Oooh, I see what you mean, and it sorta makes sense that the solicitor should have dotted those particular lower-cases-Js. It's just that I'm so used to the mortgage broker being the guy who was completely not on the ball...

[BettyNoMates]

I remember a couple of weeks ago she'd rung us to say she was doing XX and YY paperwork and one of them was that her searches indicated that the lease was only ## years, and she was amending the paperwork that the bank had sent her/us to say this. Their own surveyor had gotten the original length wrong; she was correcting them. So that bit wasn't just the solicitor telling us this after the fact - I got my information "in real time".

[LBOCS]

Unfortunately you don't have any right to extend your lease until you've lived in a property for over two years, and there are likely to be costs involved in this - possibly in excess of the £7k you've been down valued by.

[BettyNoMates]

QuiteLikely - can you clarify: "your costs should be recoverable" - what costs?

[BettyNoMates]

LBOCS: is it too late to get the vendor to do that?

[hohoho100]

Why would the vendors want to provide a lease extension when you are due to complete on friday. They wouldn't be able to do anything before thatm

[AlpacaYourThings]

The next day our mortgage broker - who, frankly, has been useless so far - rang me with "good news" (he actually used those words). Since the bank has learned of the shorter-than-they-thought leasehold, they've down-valued the property, knocking £7k off the price, so we can go and negotiate a better price with the vendor. Errm, what?

Sorry, the solicitor should have made sure that the details of the mortgage offer matched the details on the lease. I don't understand how she could have proceeded to exchange without checking this.

[BettyNoMates]

Damn, I'm really wondering how fucked I am now...

I asked the solicitor, in so many words, what are the pros and cons of exchanging and completing on the same or different days. Her reply was all about my security - once we exchange the other side can't back out. I suppose I should have asked "so, what if you've done something wrong..."

Also, the bank needs seven days to clear the funds. I think that was part of the decision.

[AlpacaYourThings]

I had to leave a week between exchange and completion (criteria set by the lender) so there wasn't an option to do both on one day.

I really think your solicitor has let you down, especially as the solicitor is most likely acting on behalf of the lender as well. Might be worth phoning the law society tomorrow, to discuss it with them.

[BettyNoMates]

I don't think the solicitor is acting for the lender. She/the firm were recommended by the EAs, but I liked the firm in general (and they're local), so I don't think they're acting for the lender.

However, in general, I guess we going to get to the bottom of this. Thank you, everybody, for the input so far. Please keep it coming.

[AlpacaYourThings]

Why do you think they aren't acting for the mortgage company? It's very common practise.

[hohoho100]

They will be acting for the lender as well - if the lender had their own solicitors you would know about it and it is unusual in england.

[BettyNoMates]

Well, they're not a big firm, they're not in a major city (or even a major solicitor-hotbed, like Northampton or Brighton). I'm not saying impossible, but they're not of a profile that one would work for a bank. I'm not ruling it out - definitely keeping an open mind - but doesn't seem likely.

How would one know for sure?

[specialsubject]

completion and exchange on the same day is not usual at all! This makes moving incredibly difficult re removals etc.

having exchanged you are committed to buy or to lose a lot of money. So if your solicitor has put you in this position without enough money, THEY are responsible. That's what you paid them to sort out.

raise merry hell tomorrow - and good luck.

[AlpacaYourThings]

Its not about the size of the firm.

It's very common practise for the lender to use the same solicitors as you. It's highly unlikely they would use their own. ( Bearing in mind this is very small fish to them).

I really think you need to be focussing your attention on why your solicitor would let you get into a situation like this. It's outrageous, frankly.

[BettyNoMates]

Thanks, Alpaca. I'll get on the phone tomorrow. I guess I need to ring whomever is her supervisor? Or should I just go straight to the head of firm or the complaints partner?

[lalalonglegs]

See if the current vendors can apply to have the lease extended using their right to do so (assuming that they have owned the property for more than 2 years). It will be much cheaper and easier to do it in their name than negotiate on an informal basis with the freeholder. If they can get it agreed in the next few days (with you paying any legal/admin fees) they can then assign the right to extend to you.

[AlpacaYourThings]

I would phone and ask to speak to the Partner who deals with client complaints.

Have a look here at the Law Society's website: www.lawsociety.org.uk/for-the-public/faqs/complaining-about-a-solicitor/ this explains how to make a complaint.

I really hope that this works out for you. although you may need a more!