Seller wants to stay on after exchanging contracts

[asks62]

A bit of a strange one I must say in our journey of finding our first home. We've had a few difficult scenarios thrown at us in the last few months but this one, I must admit is a bit too crazy to digest. Looking for any advice you can offer.

Offer accepted. We're in a rush obviously to beat the Jun 30 stamp duty deadline. (It's a big sum for us if we were to delay).
Few days later the estate agent says the sellers are doing up their new property and it'll take a few more months than planned earlier. So they're still happy to close the transaction by end of June but they will stay over for 3 months beyond the contract completion date.
They're happy to pay rent for the 3 months that they stay at technically what would be our property if we go ahead.

Problems:

1. Solicitor and bank have both red signalled it saying you need to take possession on contract exchange day. So essentially I've to lie to them saying I will be moving in there as soon as the contracts are exchanged. I'm extremely uncomfortable with this.
2. Since we would be owners all liability on the house is ours. Building insurance etc could be invalid if something were to go wrong like a fire, burglary etc.
3. We love the property. It's a nice area but we're too inexperienced to visualise the challenges we might get into because this could be breach of contract with lender etc.

The sellers seem genuine but I know nothing about them.

There are not many properties on the market because everyone seems to be buying one at the moment.
My mind says we should just let it go.

Is this a common scenario? Do you think it's worth the pain?
Estate agent is trying to talk me into it and I'm confused.
Any advice is appreciated.

Nooooooo!! No no no no.

No.

If they stay as a renter what protection do you have of they refuse to leave at the end of the agreed period?

If they are living in the property how do you know if damage to it occurs before or after its yours? This could be a scam in theory to stop you identifying problems with the property which you could chase up legally in someway.

How much could this put you out of pocket?

If your solicitor is saying no, don't do it. You don't know this person and you don't know if the estate agent can be trusted.

It has disaster written all over it.

Your bank and solicitor are saying no for a reason not to be difficult. They want to protect you and their own investment/reputation.

Christ, they’re cheeky fuckers!
Where do think you’ll be living for 3 months?
Absolutely not, if they don’t like it move on and find something else, I’ve never heard of this.

No!

I think you would need an entirely different mortgage if you are renting it out rather than owner/occupier. Not telling them is potentially fraud. The sellers can just rent anywhere. I absolutely wouldn't do it.

Oh god no!
Either they agree to exchange by 30th June or pull out if you have to complete by then.

That would get a hard no / Tough shit from me.
If they can afford 100k in renovations they can go rent an airbnb.

No.
The house is yours on completion, not exchange are you sure they’re not asking for three months between exchange and completion? That’s up to you, if you do agree the completion date forms part of the contract that you sign at exchange so it’s a done deal.

If they’re asking you to exchange with date A but complete three months after the date in your contact nobody in their right mind would agree to this.

Also your mortgage isn't for buy to let. Its for you to live in. Technically that could count as fraud, if the bank were to find out and think you had got a mortgage on false information.

I don't think you can legally do it.

No. I've lived in lots of properties I've renovated around me. What makes them so special?

If they don't want to renovate a property they are living in then they need to rent somewhere else to live.

What they don't get to do is sell their house and carry on living there because it's convenient for them. It's not your problem.

To add, if they can afford rent, they can rent somewhere else.

Worst case scenario, two days after completion they burn the house to the ground by mistake, and both their and your insurance refuse to pay out because neither were valid at the time. Slightly less bad case, they trash the place and you have no comeback. Worth keeping in mind too that evicting tenants at the moment is very difficult, and courts are very delayed. If they decide to refuse to leave after 3 months, it could take you another 6 or more months to get them out, and the associated legal costs that go with it.

The question is how badly do you want this house and how much are you prepared to risk? I would be telling them, via my solicitor, no way, they move out on completion and if their new place isn't ready, they find somewhere to rent for that time. How they do that is not your problem. However the gamble with this is that they instead decide to delay exchange by 3 months instead, at which point you're over your stamp duty deadline. Is the house worth that?

Oh and ignore the estate agent, he's only trying to push the sale through because that's when he gets paid. He has absolutely none of your best interests at heart here, he works for the sellers and himself.

No! Tell them to rent somewhere else, not your home that’s not even up for bloody rent!!
Cheeky!

so there are cases where this can work, but it generally takes a lot of trust and a lot of spare cash on both sides. you would have to get your mortgage lenders to agree, you would have to have a formal rental contract with the new buyers and you would have to be 100% sure they will move out when they say - you don't want to have to spend 6 months formally evicting them.

So I would say no, you need to move in on the day of exchange.

No, work out the cost if it’s late and offer them two different sums for different completion dates, reduced if after stamp duty change, but don’t delay exchange.

No-they can rent elsewhere or refurb whilst living in their new place. There is no cake and eat it scenario

No. If this want not a pre-condition then sorry, but No. Vacant possession on closing. They can rent somewhere else for 3 months. And you'll be paying your new mortgage once you drawdown to complete. You can agree to anything you like tbh but long list of reasons not to do this. And very likely your solicitor will want you to sign a waiver that you were advised against it but have opted to ignore the advice. Delaying completion would be preferable but then you miss the stamp duty deadline...so No.

What happens if renovations hit a snag, quite common for something to be uncovered during renovation that requires more work/adds weeks or even months to the timeline.
If they refuse to move out it will be expensive, stressful and time consuming to get them evicted. At the moment you won’t be able to evict them until 6 months past the eviction notice is served.
Unless you do a full inspection on completion day you will have no idea what damage has been done to the property, no come back if they leave rubbish and shot everywhere when they do depart as it will be so long after the completion date. What if the boiler has broken, they don’t tell you but 2 days after co portion when you are then the landlord they let you know and expect immediate repair as tenants?
Where will you live? Are you selling a house? If so you will need to find somewhere to rent for 3 months, you won’t want to unpack properly so you will be living in limbo for 3 + months while they have no impact on thier lives.
If you have to move and rent then you will have to pay fro removals twice, possibly storage and have the hassle of changing address/sorting untillities twice etc!

No way don’t agree to this, also looks like stamp duty holiday doesn’t end June it’s sept www.thetimes.co.uk/money-mentor/article/stamp-duty-holiday-extended/

Your solicitor has given you legal advice. Why are you coming onto a site of legally unqualified people asking for their random opinions?

Also, you seem to be mixing up terminology, and I hope you do understand the difference between exchange of contracts, which is when you pay the deposit and agree a date for completion, and completion itself, which is when you pay over the balance. of the money in return of vacant possession of the house.
It is a condition of any mortgage that you get vacant possession, and there are also insurance issues, as katmarie* explained.
Don't ignore legal advice which is designed to protect your interests.

You’d need to change your mortgage to a buy to let mortgage plus you need renters insurance and have up to date certificates for the gas and electric boiler service etc

You really don’t want the financial outlay

You have solicitors to do this dirty work for you!

Block contact and refer them to the solicitors.

With lockdowns this could go on for months

You could offer them early exchange with 3 months delayed completion, so the house is still owned by them but they are tied in and they lose their deposit if they pull out . But , you need full 3 months worth of rent and any loss of stamp duty benefit deducting from the purchase price.
Or they proceed with agreed price with completion before stamp duty deadline and they clear out on completion day.

I wouldn't. What if they refuse to move after the initial three months, don't landlords have to give a six month notice period now.

This is really common in North America, OP. In fact we are selling our house right now and will be staying an extra month. The new owners' home insurance kicks in at midnight on the day we complete (we call it "closing" here) and we have to get our own renters' insurance from that period in case we cause any damage to the house. It's one of the reasons no one here ever talks about a chain - it just never comes up here, everyone rents in between if the timing doesn't work out, and that can include renting your own property back for a period.

No help to you whatsoever, unfortunately, because I think you have different mortgages and laws re evicting reluctant-to-leave tenants, so in your case I wouldn't allow it!

I did this with a flat but I did not have a mortgage on it and as I was going to rent it out anyway so worked out fine. They had to sign a six months lease but we put a three month break clause. I didn't care who was paying the rent so didn't bother me.
But all the pitfalls have been explained to you by your solicitors snd here. To me it sounds lose lose to you win win for them. Just say no.