Fallen through on completion day

[catpoooffender]

Absolutely devastated. We're in the middle of a three house chain. Today we are supposed to complete and our buyers lenders have decided to do some compliance checks that may take up to nine working days. Removals company have just finished packing up the van. Cats are at cattery. Post redirected. We paid for the packing service. I hired an additional van to clear some stuff. I can't believe this can happen.

@catpoooffender Congratulations! (though sorry I can't answer your question!)

Yay congrats. Sorry dont know an answer to your query but wanted to congratulate you

A fail to complete is very rare- dont worry. Your buyers will not want to lose that much money.

Congratulations - so glad that it all worked out for you. Please don't worry now - you have exchanged, that's the main safeguard for you. Failure to complete is extremely unlikely - they would lose their deposit, as you have said. It hardly ever happens.

@catpoooffender did money physically change hands at exchange? That would only happen if you had physically given the money to the solicitor, they don't front the money for you. The alternative is you sign to say you are committed to 10% of purchase price upon exchange. If it's the later and your buyer pulls out without having actually remitted the funds you will have to take them to court yo get the money and might never see it. It's just one of many points in law which you get a very false sense of security from.

Thanks for the replies. @TheTeenageYears yes as I understand it, our buyers paid 10% deposit which was presumably passed up the chain.

My understanding was that once exchanged your buyer would become liable for your deposit and your ongoing costs?

So you would keep your deposit and any other associated costs and your buyer would be responsible for costs further up the chain?

I think it happens very rarely though, so I wouldn’t worry too much.

Oh my god that's terrible 😔 I'm sorry OP I can't even imagine how you must be feeling. I'm now sat here, madly thankful that ours went through. It never occurred to me for a second it could fall through. How naive!

If they pulled out now, after exchanging, they lose their deposit but you also have the option of pursuing them legally for the additional costs you have to burden as a result. This would include the 5k lost, moving costs, legal costs etc. However, you do have to pursue them for that - it’s not automatic. This means it takes a while, so ultimately people without the money sitting there to use are disadvantaged because it is ‘reimbursed’ after the fact.

I think this is why simultaneous exchange and completion is being recommended at the moment. So if you do not compete for any reason (your own or elsewhere in the chain) you are not committed to paying and losing the deposit and costs.

I was just thinking today about how unfair the system is because we're currently buying a house and the paperwork definitely said that if we (as buyers) failed to complete, we would lose our deposit... but if the seller fails to complete, they just return our deposit and cover any costs incurred (and even that might require costly legal action).

It seems highly unfair that the same action could leave us severely out of pocket but the seller would get off almost unscathed. This house buying malarkey can be a head scratcher!

Good luck with the completion OP and yay for getting to that stage! Good luck in your new home!

I do think it is rare for completion not to happen - if it did and all the contracts are the same, surely it's the person at the bottom of the chain who would lose their deposit as everyone else would get to keep their buyer's deposit? I hadn't thought about that aspect before.

Once we've exchanged I always feel it is a done deal. We've had a month before exchange and completion once, as our buyer's buyer wanted to exchange before giving notice on their rental property which I can understand.

When we sold our first house, the buyers gave notice on their rental property immediately and I was quite worried that everything wouldn't go through in time for them! They'd had a previous purchase fall through at a very late stage so I was surprised that they were so confident (they were absolutely lovely and a dream to deal with!) although the property we were moving into at the time was empty so perhaps they thought that reduced the risk of delays on our side.

Solicitors are currently faced with a bit of a quandary when it comes to exchange and completion timings.

In normal times, banks like 7 working days at most advance warning of completion. You send in a certificate signed by a partner at the firm, telling the bank the property is good and we want funds on "day before completion" please.

You would therefore ideally look to exchange 2 weeks prior to completion. This allows the money to be sorted, battery, removals etc etc.

At the moment however there are mortgage offers being pulled thanks to changes in lending criteria and borrowers' circumstances.

It would be DEVASTATING to exchange one day and have your offer rescinded the next. Devastating.

THIS is why sols are now going for the least worse option of shortening the time between exchange and completion / to reduce that risk.

There's also the risk of someone getting poorly or having to isolate as per test and trace guidelines, but if all parties in the chain agree - and I've not seen it yet, and property is my thing - then a Covid clause might be the way forward for that. But it doesn't include circumstances where offers are pulled.

OP there's a greater chance now that your buyers' offer and yours (if you have one) would be pulled as banks are in effect "catching up". They are now starting to really pull products. There is NOTHING to stop any lender pulling a loan offer at any time, even post exchange.

Covid Clauses are untested and some I've seen are flimsy at best, even my own isn't water right. But as I said, in any of the chains I've been dealing with not all sols have agreed to use it and therefore NONE of us can use it.

Imagine if you all had exchanged. As it turns out it looks like you would have served your notice and all likely agreed to the bottom of the chain's lender's timetable of 9 days. And you can all do that - alter the terms as long as you all agree. But you would still be in the same position, except this time you'd be worried about your deposit being forfeit and then having to chase the buyers for costs through the courts.

It's so so unfortunate how it all turned out, but what has happened here is exactly why your sol was going for the short exchange / completion turnaround...

Are you now in your new home @catpoooffender?

Yes we are!! Thanks for asking. We moved in two days ago. So happy!!

Brilliant news 🥳

Oh my goodness what a nightmare. Why on earth did your solicitor push for E and C on one day?? Isn't that exactly what that week is for, this potential situation? Horrendous. I hope that all ends up working out better still in the end and you can talk about it, but it's shit to be living it now. 🌷

So pleased for you!

Woo hoo

@AlwaysLatte

Oh my goodness what a nightmare. Why on earth did your solicitor push for E and C on one day?? Isn't that exactly what that week is for, this potential situation? Horrendous. I hope that all ends up working out better still in the end and you can talk about it, but it's shit to be living it now. 🌷

Because of Covid. A lot of solicitors were advising this apparently, because if we had exchanged and were then unable to complete either because of being ill/quarantined/local lockdowns, we could have ended up in breach of contract. At the time the way she presented it was pretty much 'this is what everyone is doing, if you choose to do differently it's at your [significant] risk', which of course is true, but there is risk in all scenarios and on reflection I think the Covid-related risks were overstated in this specific scenario. Anyway, at least we got there in the end!

Well done! So relieved for you. We’re on the market and I’m going to keep your experience in mind - push for a week between exchange and complete at minimum.