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?

Thank you lalalonglegs! We'll see about doing that. I cant say I've got loads of cash to do that, either, but we could probably cobble something together if they have a positive result. One thing I know already is that they (the vendor/management company) need £250ish just to look into it to see how much they'd charge for doing it.

I'll be honest: one thing I think we'd hoped was to be able to (with the sole other leaseholder of the property) buy the freehold outright. Not saying that changes anything, but it does affect how "immediate" we thought we'd be about the concept of extending the leasehold. If ye dig.

I didn't know before this about having to be owners for two years before being able to do this, and the solicitor hadn't said it. I think I had some concept that you can't do it within XX years of the lease expiring, but (particularly since I never discussed that concept with solicitor) that is neither here nor there. A few weeks ago, when solicitor and I discussed the general concept of extending the lease (mainly/solely in order to enhance our own investment), she never mentioned the "having to own it for ..." concept.

Alpaca, thanks for your wise words.

You don't have to have owned the flat for two years in order to apply to buy a share of freehold - just to acquire the right to extend the lease. Buying share of the freehold will generally be more expensive.

I meant, we have absolutely no idea how the sole other leaseholder is minded to be about the buying-freehold thing (we haven't moved in yet, we don't know her, so it really wasn't top of mind). I'm under the impression that if they don't want to do it, we can't do it on our own.

I'd meant the "two years before extending the lease".

You can do it on your own, if you want. Then you'd own the freehold - but still be there under leasehold terms. I'd be wary of it unless you know what you're doing though; the whole steaks subject to quite a lot of specific legislation which can open you up to financial penalties for not doing it properly, at the very least.

There's no restriction on extending your lease whatever its age, but once you drop below 80 years you get into paying the 'marriage value' - an additional cost because your lease is short, and that can make it a lot more costly.

I'm confused, is it the property you are selling which the buyers now can only get a lower mortgage for , or for one you are buying. Either way you can renegotiate although the other side may not cooperate and get a cash transfer back (all on paper of course) but the stamp duty on and land registry shows higher amount or you have to find the difference. Solicitors should n't exchange without a firm mortgage offer in place and proof of it so something has definitely gone awry between them and bank. Assuming this is your end you need to speak to the managing partner first thing on Monday. Make it clear you hold them liable for additional costs unless they can prove otherwise.

We're buying, LIZS, and no, we cannot renegotiate, particularly because we're exchanged (but, also, we've sensed a lot of twuntery from the vendor - they've not budged an inch on other things, which aren't really related, but definite signs of twuntery).

The solicitor had had A mortgage offer in place (the one that was based on the longer-length-lease erroneous information) but, because of the information SHE gave them, the lease is 5 years less than what their surveyor had thought (surveyor had based their information purely on what they'd heard from the EA). (NB both amounts were less than 80 years, but both well above the general "lender's requirements" (i.e. length of our mortgage + 25 years).

So, as far as we know, she was acting on the one and only mortgage offer she'd received. Of course, people have been telling me it was her responsibility to ensure that that was correct, so I'm going to be working to that.

I'd been under the impression that the solicitor gave them the correct leasehold-length information because it's simply part of the contract, and she wanted to ensure that it was correct.

OK, guys, am about to make a bunch of phone calls now. Really not looking forward to it - wouldn't be at the best of times, and I've been awake since 3am, so this is really not going to be a good day, is it.

Thank you so much for your help.

Good luck. Tbh, if the lease is shorter than 80 years, then I'm not surprised the bank has down valued the property. As others have said, your solicitor has been very slack.

How did you get on today, Betty?

There are ways of raising the £7k quickly but it will be expensive.
You could borrow £7k on bridging finance to complete with (available in hours usually) and keep that in place until you've extended the lease and your mortgage lender will top up the mortgage so you can repay the bridging.

Imo. Your solicitor should be looking forwards their PI cover to find you the £7k. However a complaint will take awhile to sort out and you don't have much time.

Sorry this has happened to you. What a nightmare.

Hi guys. thanks for all your kind words and wisdom.

Don't want to get into too many details (have just sent Alpaca a helluva PM though!), but it's mostly sorted. The bank, by the end of the day, sent through a revised offer letter with the same amount of money offered, but a different kind of "product" - overall, we'll be paying £15ish a month more for the next two years. Which, recently-useful-broker guy tells us, can totally be claimed from either the solicitors or the bank, as it was clearly between them. And we're still on track to complete for Friday.

Slept OK last night, not great, but OK.

That's good. I'd still try to get the current owners to assign the right to extend before completion though.