Triangle Chain

[Hfhampton]

Hi - I am part of a property chain of 3 houses. All going smoothly so far but are we going to hit a problem at the point of exchange/completion? There’s no start or end to the chain as all three properties are linked together in a triangle.

Buyers A selling property 1 and buying property 2
Buyers B selling property 2 and buying property 3
Buyers C selling property 3 and buying property 1

It’s all been great so far with everyone invested in progressing to ensure their sale/purchase happens. But I can’t get my head round how we can ever complete as we all need the transaction before ours to complete before each purchase is possible? But with no real start to the chain we’re stuck in a loop where nobody can complete first?

Any wise words of reassurance or experience from similar situations are massively appreciated! Thanks!

I don't work in conveyancing, nor do I have personal experience of this. But I used to work in the finance industry and imagine this sort of transaction would be handled in the same way that banks do things... Basically, banks don't actually transfer money across for each individual transaction. Suppose in one day, Bank A needs to send £100 to Bank B, and then Bank B needs to send £200 to Bank A, and then Bank A needs to send £75 to Bank B. Instead of 3 transactions happening in real time, at the end of the business day they just calculate that the net effect is that Bank B needs to send £25 to Bank A.

So I imagine this will be similar. If there are mortgages involved, those will be drawn down before any of the purchases happen. Then instead of transferring the absolute amounts for each purchase, the solicitors will just work out where the money needs to be re-distributed in line with the agreed sale prices.

@PowerslidePanda that makes a lot of sense. Thanks so much for taking the time to respond!

Solicitors will hold funds ‘to order’ which helps ease chains and facilitate completions

Hi,
just out of curiosity how did you get on with this as I am in the same position!

Hello - it went smoothly in the end!

It helped that there were three very different buying prices and we were buying in order of value to make it work I think. So the middle value house was moving into the highest value house, the highest value house was downsizing into the lowest value house and the lowest value house was moving into the middle value house.

All three mortgages were drawn down for the agreed completion date. The full mortgage money from the owners of the middle value house were sent to solicitors of the highest value house (not enough to fully buy the house yet - 15% short but enough to get the chain started). This then meant that the solicitors of the highest value house had received enough to fully buy the smallest value house so that was the first completion done. The smallest value house solicitors could then send the full money round to the middle value house solicitors and that gave them the extra bit that was missing from the first transaction. The final completion on the day was the purchase of the highest value house by the middle house owners. That purchase just happened in two transactions - 85% first thing in the morning from the mortgage money and then the extra 15% topped up in the afternoon once the completion at the other end had gone through.

Hope that makes sense! It was a long day because each step had to wait for money to clear into accounts etc. From memory the first money got sent around 10am and I think the last completion happened about 6pm ish.

It did help to flag it early on with the conveyancers though so they were aware that one of the completions was going to be a two step transaction and they were able to plan ahead for people to be free to deal with things as soon as money was cleared etc to make sure it could all be done in one day.

Good luck!