Circular Chain

[GreyPaw]

Anyone else had any experience of this? Current situation:

Property 1: Mine, which is at the top of the chain, am being forced to sell as DH died and I can't pay the mortgage. Big house, lots of money owed.

Property 2: Owned by the people who are buying my house, who are moving to mine with their parents.

Property 3: Sweet little country cottage, owned by the people who are buying Property 2.

I was going to go into rental, but a couple of months ago, the person buying Property 3 pulled out and the whole chain was about to fall apart. I went to view Property 3 as it ticked a lot of boxes for me, and decided that it was a good idea to offer for it as a) it's really nice and would suit us and b) it completes the chain, which I really need to do.

Has anyone else done similar? I have no idea what happens with payment of deposits / balance etc, but presume the solicitors will just work it out.

I was kind of thinking it might make my sale less vulnerable, as if my buyers pull out, I'll have to pull out of my purchase which means my buyer loses their buyers. On the other hand I'm in a weird situation where, post-survey, my buyers might try to reduce the price. I'm in a position where I could request a price reduction on Property 3 as there are a few things wrong with it, but then won't the owners of Property 3 just try for a reduction on Property 2 and we're back where we started?

You might need coffee/paracetamol for working out this one, apologies.

That has confused me! Are you sure you want to buy 3 for the right reasons and not just because it's convenient?

My friend had similar but only 2 properties.
They were upsizing and their purchaser/vendor downsizing.
No issues with it.

I think what you describe is pretty common

But there isn't a way to safeguard against people playing silly buggers, so I actually wouldn't think about possible scenarios tbh.

@GreyPaw I’m sorry to hear about your DH - I hope you’re ok

As you said, I’m sure the solicitors will have seen this before and will know how to work out deposits, etc.

I think on the price reduction front you’ll have to trust that everyone else will know it’s a circular chain and hopefully will be able to see that any reduction they ask for will work it’s way round the chain and end up as a proposed reduction on the price of the property they’re selling too...

Good luck - I hope it all works out for you.

I'm sorry to hear about your loss.

Did you and your DH have life cover? It normally covers the mortgage in the event of a death of one of the persons on the mortgage and a requirement of the lender.

No life cover because of a pre-existing condition. There were some payouts, but nowhere near enough. Mortgage isn't covered and I need to sell before the house is repossessed, so while I may not have bought Property 3 in other circumstances, it will work well for us and gets us out of a bigger problem.

Glad to hear the situation isn't too unusual - hopefully the solicitors will have it all in hand.

No particular reason why this should be a problem.
Some advantages- everyone can clearly see what they're gaining by the circle going smoothly.

I once dealt with a different circle- a long chain, going from tiny house to really quite expensive. Whole chain was wobbling when tiny house lost their FTB. Mr Expensive house discovered this, and simply bought the tiny house as well, just to make the whole thing work.

Sorry you're having to sell in sad circumstances, really hope this works out for you.

Hey we completed on a similar situation in November, our sellers (top of the chain) bought from our buyer (bottom of the chain), we were sandwiched in the middle. They did this after our buyers buyer (FTB) went AWOL just before exchange. I think it was a similar situation in that out seller was left with a large house they couldn't afford for too much longer, (they had already completed their onward purchase so were dealing with two houses and couldn't afford both for very long etc.). The seller put the flat at the bottom straight back on the market the day after completion.

The solicitors didn't seem fazed, on exchange day everyone agreed to just pass a token deposit around (obviously we were backed with legal stuff if it all went wrong). For us, it solved a huge problem as we were really worried about everything falling through at the last minute after a traumatic conveyancing process to even get near exchange.

Sorry about your husband by the way, I'm sorry its meant you need to go through this.

Thanks all, that's really reassuring. Yes it might be that the house I'm buying goes back onto the market next spring after I've had some time to rest and recover (along with my credit rating). On the other hand I might fall in love with the place as it's a gorgeous cosy country cottage with exposed beams so I've still lucked out, in lots of ways.

My parents did this many years ago. The people buying my parents’ house had been messed about by their buyer who probably wanted to delay the transaction to end of school year. However, they weren’t upfront about this and there was delay after delay. My parents had not found another property, viewed the buyers’ house and bought it.
Transaction was stress free.

@GreyPaw It does sound nice. I guess just make sure it's right for the time being vs renting. Its obviously a good outcome for the rest of the chain, we discounted a little (as did our buyer) to our sellers as they were doing the chain a favour to keep it going. I don't know if that's the right thing but it felt fair to us. These must be confusing and upheaving times for you.