Are we mad to proceed?

[waterjungle]

We exchanged contracts before Corona happened. Our move date has been pushed back once due to the practicalities of lockdown. It has now been pushed back again until mid-May.

Our vendors solicitors came back to use with a new document with extra clauses to sign. These included a mutual agreement not to sue if the Coronavirus / lockdown prevented the sale from going through e.g economy crashing, banks withdrawing mortgage offers etc....

The vendors estate agent previously said they were keen to move sooner as they had financial pressures.

Now my husband thinks they want to pull out and it has given him cold feet. Although his income hasn't yet been affected by the lockdown he has started talking of global meltdowns, world recessions and bankruptcy.

It is our first house, we have nothing to sell having moved from the southeast where we spent 20 years in rented. The deposit is our life savings.

Also our son has just had his school place confirmed for the school next to our new house.

Are we crazy to proceed, is my husband right to think about trying to abandon this? What if after all of this the banks aren't giving out mortgages except with higher deposits - we will be in rented forever? Any opinions on our situation or is anyone in a similar position?

First of all - you are a buyer ready to go so you are in a strong position, so don’t worry too much and try to keep it in perspective.

Secondly, how much do you want the house?

What does YOUR solicitor say about the new document? You're paying good money for their services so use them!
As you have already exchanged it's going to be costly if it doesn't go through, although by the sounds of it the new doc might get you out of that. I can't see any real issue

Solicitor says he has never seen a document like it before however we are in unusual times and it seems to be sensible to protect all involved from suing each other.
The house is the result of a 9 month search and is a 9/10. Could do with a bigger garden and a garage but we wouldn't be able to afford it if it had those things.
We are early forties with two kids under 4 and have had enough of years renting while we worked hard in London. We desperately just want our own home and to feel settled with our family. I have the feeling it will never happen if we don't to it now.

If you've exchanged and you pull out, you would lose your deposit?

At this point you lose the 10% (I think??) paid at exchange if you pull out but you probably know this. On the surface it seems like a good idea to remove the possibility of them being able to sue you and just get it all completed asap.

I don’t think the document the other solicitor has produced would allow you to pull out at this stage so I think you have to proceed for now.

Is there a chain or is it just you and the vendor?

There is no chain on our end. Basically my husband thinks our vendor wants to pull out because of this document. This has put the willies up him (so to speak). Our mortgage company is doing a general check with everyone to ensure that they can still afford the mortgage that was agreed pre - Corona.

Husband is considering 'self-sabotage' and saying we are in a different financial position now - even though so far his wage hasn't been affected (he is self-employed). His argument is there will be a global financial melt down and his wages COULD be affected in the future as no one knows what will happen.

This would then dissolve the contract as per the new clauses without anyone suing each other. He has always been scared if mortgages. His parents lived in a large house rent free because of his fathers job that they could never have afforded on their own. It has taken years for him to even come around to the idea of having one and now this happens and he is skittish perhaps understandably. I on the other hand am exasperated!

@waterjungle My understanding is that once you have exchanged the sale is legally binding for both buyer and seller. Obviously get the new agreement checked over and check what happens to the deposit you would have paid.

IMO I do not think you would be 'mad to proceed'. Thing is, you will have to pay rent or mortgage either way; with the mortgage you stand to gain an asset with the house, but you won't get that option with renting. Sounds like the house is a good buy for you if you consider it as 9/10 and it took a decent amount of time to find from the sounds of it. I can see where your husband is coming from, but that might always be his feelings about mortgages. A mortgage is a debt, so there is risk involved. However, from what you have written, it sounds like a calculated risk.

Good luck!

So your DH wants to pull out?
And your DH thinks the seller wants to pull out?

What is the position of the seller? Were they trading up? Any chance they have lost their job?

Does your DH think that the legal doc is to stop YOU claiming legal fees etc on top of your deposit return if your sellers pull out?

If so I wouldn’t sign it. No benefit to you.

Sounds like your DH is getting cold feet (like he has had for a lifetime) - but the risks to him if he is self employed is getting another mortgage post COVID. He might not get one. So even if prices drop - you won’t be in a position to buy.

What’s your LTV, do you plan to stay long term? What could you do if DH income reduced?

Sounds like you have made a v long term decision for this move, if your DH is not in a risky industry and LTV is not too high then I would be tempted to prioritise getting on with your life choices and assume that when you come to move again in 5-10 years time you wouldn’t be in negative equity.

Looks like you and your DH can’t call it off without losing your deposit - but if the seller does you would get the deposit back and could sue for all other expenses lost (if you don’t sign the doc).

Would you consider moving to the area and renting if it all fell through?

If you're early forties and don't buy now it could be harder to get a 25 year mortgage as you get older. You should still be able to get a mortgage but with a shorter term so it would cost more.

Surely you don't need to agree to sign any extra documents as you've already exchanged? I wouldn't sign anything further now but I also wouldn't pull out as you committed at the point of exchange and you would lose your deposit.

What will your loan to value be? Ie do you have a significant deposit to weather a potential storm, how much of your income will be taken up by the mortgage and would it still be affordable on one of your wages or if you had a reduced wage or loss of bonuses etc.

We have a 20% deposit and our monthly payments are about £100 more than we currently pay in rent.

The extra clauses go both ways so if either have to pull out to to something Covid related (eg mortgage gets pulled by bank, we agree not to sue each other and return deposit within further consequences).

It is definitely a 'forever' home for the next 5/10 years.

At the moment I am not working as I had to give up my job to relocate here. I finished my last paid mat leave in Sep and my youngest is 18 months so planning on getting back into some kind of work soon (I have done some freelance before all this corona madness).

DH salary would cover mortgage and mine earnings would be extra for kids stuff etc.

The house needs nothing doing to it decoratively and is very much ready to move in.

@waterjungle

The extra clauses may just be a precautionary thing the sellers' solicitors have advised all their clients, rather than something your seller has specifically requested. I did read somewhere (can't remember where now!) that it was wise for conveyancing solicitors to add extra clauses because of some guidance/advice from the Law Society.

So, to put your husband's mind at some ease it may be worth highlighting that it's more likely to be a sensible 'cover our backs' thing introduced because of the situation rather than the sellers getting cold feet or anything.

This was something I found after a quick google search and might be helpful
Law Society: Coronavirus (COVID-19) and residential conveyancing transactions.

FWIW The home sounds ideal for you and family.

I'm a suspicious person and my thoughts are that this is a way of them dropping the bombshell they have lost their jobs or had their mortgage pulled and can't afford to move thereby allowing everyone to withdraw from the purchase and for them not to incur additional costs. I have brough and sold a number of times and never heard of anything coming up post exchange. I suspect there is something going on with there situation tbh.

Agree R2519. If that’s the case OPs DH won’t have to worry about manoeuvring to pull out because the deal will fall through.

Nothing much to do but sit and wait. Can’t see what signing the form would achieve for you as FTBs - others up the chain who are buying and selling might find it helpful.

Do you know if it was instigated by your sellers or someone else up the chain?

If they had financial issues before COVID and you think these have been exacerbated you would assume that they would be delighted to get shot of their property and move into rented? Maybe they just need to break the chain above them?

With your situation I’d proceed.
It’s a long term home, you’re not working atm so if dh’s job became unstable you could get a job.
This clause sounds like it’s to protect the sellers more- are they downsizing and need to money quickly?

You have exchanged and you are contractually required to complete. Failure to do so will result in loss of deposit and risk of being sued for any other damages or costs the other party incurs

Don't start signing the new document. That in effect enables the vendor to renege on what they have also contractually committed to. The kinky reason to do is if you wanted to pull out but let them initiate it.

Yes the housing market will probably crash to some extent. Not sure how much as there is still a lack of supply so will probably underpin it

If you have already exchanged then you are contracted to complete according to the exchange document - including specified date / costs / other clauses...

while you can vary that if everyone in a chain agrees, it only takes one person to not agree to change it for it to remain in force...

so I would continue and complete - I think there will be a lot of difficulty in moving over the next 6-12 months and mortgages will be harder to get etc.

R2519 You were thinking what we were. I think this is what triggered the latest batch of collywobbles from DH, he thought maybe they had the right idea and it all spirals in his head.

MarieG10 great typo, there are many reasons going around his head not sure how many are kinky!!!!

They are also contractually obliged to do some work before completion (fix a gutter and some roof tiles). It seems they haven't done that yet which deepens the suspicion that they do not intend to move.

If you still want the house and have exchanged and mortgage offer still valid then I'm still not seeing a problem. Just get to completion as early as possible.

@waterjungle.
Just a suggestion.....speak to your solicitor and have them ask up the chain, in regards to this additional document, for each vendor to confirm in writing that their situation remains the same, as in, they are proceedable, mortgages in place etc. and nothing have changed in circumstances. Having this put in writing should make anyone think twice if they know otherwise.

What i mean is, if they know they are not proceedable or have lost their mortgage etc. and they say they are then sign this document then drop the bombshell i would put a lot of weight on that being against the law as they knew before signing the document that their situation had changed. I dont know if it would work but if it was me i would want it in writing that as of todays date, nothing has changed.

I don't think I'd sign any such document. Let them pull out if you'd be happy with that. And don't trust them.

Well I'd go back to your solicitor and ask given that you have already exchanged and are ready to go and have the finances in place so very little risk on your side, what on earth do you have to gain by signing this contract. My main concern would be that you sign and they keep pushing the move date back because they are in a chain and you are left without a house to move into, without a deposit and no legal redress because you signed this document. Lazy solicitor comment I think. I would be asking him to work for his money and find out where this document has appeared from. If someone has gone to the trouble of drawing this contract up, it must be to protect someone in the chain in particular, and for sure it's not you!

I don't think I'd sign any such document. Let them pull out if you'd be happy with that. And don't trust them.

This.

Don’t let your vendors shift their risk onto you after exchange.