To accept more than 3 months between exchange and completion? Vendor is buying a new build...

[augustusbloom]

Hi all

We had an offer accepted on a property at the weekend (yay!) and the estate agent advised that the vendors are purchasing a new build in Jan/Feb '22 when complete, so are looking to exchange ideally in the next 5 - 6 weeks. We saw no issue with that initially and were pleased our offer was accepted.

Fast forward a couple of days and we received an email which confirmed that the sellers will require early exchange and completion around Feb/March '22 (getting later already...) once the apartment is ready, and that we would be 'advised of the completion date by the developer'.

This has made us nervous as we do not want to be handing over a great sum of money saved over several years with no accurate estimate of completion date in sight, basically being at the developer's beck and call. We'd also be losing out on interest on our deposit as it is accruing in our various savings/investment pots. We also have no idea of much notice we would get from the developer, and as we are renting, would need to give 1 months' notice which could leave us out of pocket if their notice is less. We have an estimated date of when the new builds will be ready, but we need to get more of an idea of what stage they are actually at as new builds always tend to run over. Finally, I understand we have to insure the property from exchange of contracts (?), which could mean us insuring for months longer than anticipated. There is also the obvious risk of our mortgage offer expiring.

We are due to speak with our solicitor and get legal advice on all of this, but would also appreciate the hive mind's view on what we see as two broad options:

1. Refuse to exchange until we have a completion date and/or exchange, but set a fixed completion date

We think that the vendors needs to prove to the developer that they have exchanged before they can 'secure' the property (does this sound right?) and it may lead them to try and find another buyer, but we are struggling to see what sort of buyer would wait around without their deposit and that much uncertainty, especially if they are in a chain? We would suggest that our vendors break the chain and stay with family/rent if the completion date comes and goes and their new build is not ready (likely) but equally we can't imagine them wanting to do this (they are in their 80s)

2. Agree a reasonable long-stop date with adequate financial cover by the vendor

Agree to a specified date after which we are free to get out of the contract if completion hasn't happened. If we are exchanging this side of Christmas, I would be inclined to make this end of February 2022 as per the new build brochures estimation... any thoughts on this? What happens if this date passes, can you just get your deposit back from the solicitor quickly, no questions asked? I would also be inclined to request that the seller pays for/reduces the purchase price by the amount of insurance we may incur on their property whilst we cannot live in it, and also the month's rent we may end up having to pay unnecessarily if the notice of completion is less than 30 days. If we pull out because of the uncertainty and the sellers are not prepared to budge by moving in with family/a rental, I would also consider asking to be reimbursed for all the legal fees/surveys/searches we have paid for on the basis that the sale would be completed by X date.

Does anyone have experience with either of the above and could offer some advice/guidance?

Separately, what would happen in this scenario if one of the vendors gets sick or worse? They are elderly so this isn't beyond the realms of possibility. I think we'd need a long-stop date for sure not to get burdened with a potential probate (unless we are prepared to go through that process).

Thank you.

I'd never, ever exchange without a fixed date on the contract. And if they mucked me about between offer and exchange, such as by shifting dates, I'd go and look for another property. And I probably wouldn't bother telling them until/unless I'd had an offer accepted.

Basically, they want to hold you to your offer indefinitely. It annoys me that people are so cheeky as to even ask. If they want this level of flexibility as to timing, it's easy. They sell to you, then rent until their property is ready. If they won't do that, I'd tell them to go and bury themselves.
I've been very patient with sellers with genuine difficulties, to the tune of 6 months, but I don't waste my time with selfish chancers.

Bear in mind you have to insure it between exchange and completion.
And if you wait a while before you exchange, be sure to get a 'pre-exchange visit' to ensure the property has not been altered or damaged since your offer was made, which might mean you having to withdraw or, at worst, drop your offer.
If they aren't in a position to sell, they ought not to have put the house on the market.

@FFSFFSFFS

Run. Even if you draft it so you have the legal right to get the deposit back it would Be expensive and difficult to ever actually get it back. I wouldn’t touch with a barge pole. Sorry. Only option I’d offer them is a short period between exchange and completion for them to find a rental property to move into.

Thanks @FFSFFSFFS

I think that's what we plan to do - either offer them early exchange with completion shortly after, or to not exchange until they receive notice of completion on their new build. The former offers more certainty for everyone but they'll have to go into rented, the latter offers no certainty for anyone and the chance they'll lose us or any other buyer they go with, but they can stay in their property until next year. I know what I'd prefer, but it's not going to be our decision!

@BlueMongoose

Bear in mind you have to insure it between exchange and completion. And if you wait a while before you exchange, be sure to get a 'pre-exchange visit' to ensure the property has not been altered or damaged since your offer was made, which might mean you having to withdraw or, at worst, drop your offer. If they aren't in a position to sell, they ought not to have put the house on the market.

@BlueMongoose I need to channel your vibes. It does feel quite selfish, doesn't it? The estate agent threw around 'early exchange' at the viewing and then by email once offer was accepted 'exchange on notice without a set completion date'; plainly we weren't going to get any legal advice until our offer had been accepted, and so I imagine we're going to get "oh the buyer only went with you because you already agreed to this ridiculous ask" and then we'll have the "having sought legal advice, are you mad?" debacle, but I feel like we're still in as strong position we could be (as in, who else would agree to this, plus we are in rented so otherwise good to go). If they don't want us, so be it.

Very good point on pre-exchange visit and yes the insurance and risk of mortgage offer expiring is a real concern.

Thank you!

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Add message | Report | Message poster | Quote | See allBlueMongoose Wed 13-Oct-21 20:09:25
Bear in mind you have to insure it between exchange and completion.
And if you wait a while before you exchange, be sure to get a 'pre-exchange visit' to ensure the property has not been altered or damaged since your offer was made, which might mean you having to withdraw or, at worst, drop your offer.
If they aren't in a position to sell, they ought not to have put the house on the market.

When I worked for a new build developer - they gave only 10 days notice of completion date. It’s right to the wire - the paint was literally still drying ! Do not agree to anything other than standard exchange and completion with the sellers moving to rented in the interim - that’s their issue to fund and stress to endure - why is this being passed to you!?!

The EA is being v v slippery - they know full well what’s involved. Ignore - stick to your guns and be prepared to walk away.

Do you know the developer or development they are moving to - because they likely have a buyers forum screaming about delays - google it…..the sellers might thank you for managing everyone’s expectations

The main thing is you are being very sensible and understanding all of the issues involved and recognising the slippery nature of the EA who is underplaying everything (as usual) and moving the goalposts.

The fact that you as current renters are the only type of people who could facilitate this very "flexible" and unrealistic purchase stands you in good stead. And I mean this as you are going to have to tell them it's standard exchange with completion - even if completion is one month after exchange. So if you as the only category of potential buyers find it unacceptable, your vendors will need to realise there is no other choice in the matter other than normal purchase arrangements with them potentially going into rental.

The vendor is wanting everything their own way in an unusual property purchase. But the onus is on them to make this worth as they have chosen a new build and they are just trying to pass all of the difficulties back to you.

The owner does have other choices such as bridging loans etc but obviously does not wish to pursue alternative finance. Well that is not your problem.

I think you need to ascertain very quickly whether the vendors understand this position as if they are going to stick to their guns this could be a massive waste of your time and money.

They may also end up having to do a part exchange with the developer of the new build that takes you out of the equation anyway.

We were the vendors buying a new build last year. Sold to FTB. We were given June as the date when we sold but then Covid hit. Our new date was September which was also the month ours and our buyers mortgage offer was to expire. The only way to ensure the sale, which completed in August was for us to move in with my parents for a month knowing that potentially it could be longer. Thankfully we were able to move into our new build in September and sometimes I think it was a lot of hassle for a month especially being heavily pregnant and a toddler running around but if we didn't there was a very good chance we wouldn't be in our lovely new house.

Our neighbours, who were in their 70's, recently moved. They are buying a new house off plan and have moved into rented until it is ready. Their house was on the market for quite a long time because originally they hoped to do a deal like the one OP is being asked to do, unfortunately for them they could not find a purchaser on this basis. It might turn into a real nightmare, so i'd also try to avoid going forward on that basis.

We had this exact situation. We agreed to wait a further three months (as did our buyers) but they had to move out to an Air BnB. It strengthened our argument that our buyers mortgage was about to expire, so they had no choice because without agreeing to it, the entire chain didn't exist because the funds couldn't move up the chain and ultimately, if we couldn't sell our house, we couldn't buy theirs, and they couldn't buy their new build

@ExConstance

Our neighbours, who were in their 70's, recently moved. They are buying a new house off plan and have moved into rented until it is ready. Their house was on the market for quite a long time because originally they hoped to do a deal like the one OP is being asked to do, unfortunately for them they could not find a purchaser on this basis. It might turn into a real nightmare, so i'd also try to avoid going forward on that basis.

It seems that a lot of people going for new-builds appear to expect buyers on a string at the moment- surely HAs and solicitors warn sellers that expecting this is likely to muck up a sale when the buyers find out? I've been shocked at a few instances I have heard of where buyers' solicitors haven't warned very strongly against such contracts- I'd expect solicitors to take the 'barge pole' view of a contract with no dates on it, and I think most of them do.

I just had exactly this. Unfortunately had paid solicitors searches, survey before vendor announced actually they were going into new build. Developer demanded immediate exchange, long stop of 6 months. Me paying insurance between, mortgage offer for to expire mid way. Vendor absolutely refused to go into rented and even suggested I pay thousands to them if I wanted them to, cheeky f*ckers. In the end something major had come to light with the survey and I pulled out. Would never go down that road again and in your circumstances would run for the hills OP.

solicitors haven't warned very strongly against such contracts

Mine didn't. It was only by coming on here I got the right advice, frankly.

@ Tiny
It is amazing how a vendor expects their purchaser to take all the inconvenience and uncertainty in the process when they are the ones going into a new build with all the inevitable delays that can be involved with their own new build purchase.

I get that there are delays with new build but surely the ones buying the new build then need to sell their own property, go into rental or part exchange with the developer at the outset. There is no way that a chain can support all the delay as it would just fall apart.

Thought I'd pop on to update you.

Last week we raised this with the estate agent who was all "oh but this is just how these things run, your solicitor must not know her stuff", "the seller went with you because of your situation", "the seller won't move out sooo...". We sent a detailed email after the call clarifying our position and asking them to get back to us with the seller's thoughts.

Late last week we received an email confirming that the EA had spoken to fernham (the developer) who advised that they will have a set completion date with the seller (and we clarified that our assumption is therefore that we would have a set completion date in OUR contract). We then spoke through the process and the EA was like "you should be able to exchange this side of Christmas as your surveys/searches etc should be done by then" at which point I reminded her, again, that "that may be the case but if there isn't a completion date set at that stage, i.e. because the developer isn't 100% sure when the property will be ready, then we won't be exchanging even if everything is technically ready" and is was like "right okay...".

So, I feel like we have put forward our position clearly and multiple times and fingers crossed it runs relatively smoothly.

My instinct is that once we've paid for searches, surveys etc we will then be badgered to exchange WITHOUT a completion date despite setting out our position in advance, but we've agreed that if that is the case we will simply refuse to do on the basis set out previously and will ultimately call their bluff if we need to - we highly doubt they would find another buyer quickly and who could exchange at a drop of a hat at that late stage so we hope it wouldn't make sense for them to risk losing us as buyers.

Thanks again for all of your help - any other words of wisdom for us going forwards would be much appreciated (and I imagine giving the minor hiccups at this early stage this won't be the end of this thread haha).

Also apologies for all those awful typos in my post above - I'm on the move!

I think your vendors need to commit to a completion date with you, and then go into rented or stay with friends if their house is not ready.

They are asking you to facilitate all their uncertainty wrt dates, tie up your money, deal with keeping your mortgage offer etc etc.

You can ask your solicitor how to protect your interests, but there is a straightforward solution and it entails the vendor breaking the chain / moving in with family.

The building industry supply lines and Labour are terrible atm.

Maybe I’m misunderstanding your situation BUT if you exchange you will have to set a completion date as part of the process. This is a binding contract and your seller will have to be out by that date or be in breach of contract. If their new build overruns it is up to them to find a rental/ alternative accommodation/storage for their stuff or they will be in breach of contract. Once you’ve exchanged they can’t change the date.

One thing that is worth thinking about is that you are legally bound to the purchase on exchange and will have to insure the house from that date so the longer the window between exchange and completion means the larger timescale for current owners to stop looking after the property/ maintenance issue they don’t want to pay for arise etc etc

@EdgeOfTheSky

Exactly - that is what we have said to the EA - we won't be exchanging without a set completion date, end of. It's unfair and silly to expect us to take all of the risk. If the vendor doesn't wish to exchange with a set completion date (e.g. because the developer is missing them around) then we simply won't exchange - the vendor need our deposit to proceed with their purchase and if the EA is being truthful (i.e. the developer will commit to a set completion date with our vendors, to enable our sale to go through) then hopefully that is what will happen (otherwise the whole chain, albeit small, just falls apart).

@WhatAWasteOfOranges

I thought the same as you at the start of this process but then our solicitor was saying that you can exchange contracts with either a long stop date (not the same as a completion date as it's essentially a get-out-of-jail-free card for the seller) or an 'estimation' (baloney) but he strongly advised us against it (a position we'd already taken and were glad she agreed with).

Agree it's up to them to sort something out if the new build is not ready. We can see the development and know that it is in motion (the first two phases are complete and people are already living there, this is the final stage and people are starting to move in from December) so I think the EA is confident that by the time we are ready to exchange, the developer can say "yep, we'll be good to go in 2 weeks/3 weeks" and that will give us the green light (proof is in the pudding though eh!)

Agree with the insurance, we really don't want more than 1 month between exchange and completion (and even that gives me the shakes) also because we are in rental so want to give our landlord sufficient notice, although I think we will have at least a week crossover to help us with the move.

I commented further up thread when you had originally posted.

Well you seem to be getting somewhere if the developer will have a completion date for your own vendor - if that is true!

Estate Agents are such sharks sometimes aren't they! One minute they are saying to you the vendor only went with you blah blah blah. Then the next minute the onward new build will have a completion date for your vendor - so which one is the truth? I suppose time will tell.

You have been clear and now you just stick to your guns. They need you and them to exchange (to have your deposit money to use for their onwards purchase) and you will not exchange without a completion date. In some ways yes I agree with you that if they need your exchange deposit money and you need the date then the ball is back in their court to get this off the developer before anything can proceed. And if you pull out they are back at square one.

There are positives in that you can see the development and there are already people living there and the part your vendor is involved in is the final stage. So hopefully with a bit of jiggery pokery, arguing with the EA, the vendor arguing with the developer etc etc it may all work out.

As you say the proof is in the pudding. But at least you are very clear in your own mind what is acceptable from your side. You have been crystal clear in this as well. Even if this whole process takes say a month or 6 weeks longer than anticipated that's still all doable.

Here's hoping for you.

@friendlycat

I commented further up thread when you had originally posted.

Well you seem to be getting somewhere if the developer will have a completion date for your own vendor - if that is true!

Estate Agents are such sharks sometimes aren't they! One minute they are saying to you the vendor only went with you blah blah blah. Then the next minute the onward new build will have a completion date for your vendor - so which one is the truth? I suppose time will tell.

You have been clear and now you just stick to your guns. They need you and them to exchange (to have your deposit money to use for their onwards purchase) and you will not exchange without a completion date. In some ways yes I agree with you that if they need your exchange deposit money and you need the date then the ball is back in their court to get this off the developer before anything can proceed. And if you pull out they are back at square one.

There are positives in that you can see the development and there are already people living there and the part your vendor is involved in is the final stage. So hopefully with a bit of jiggery pokery, arguing with the EA, the vendor arguing with the developer etc etc it may all work out.

As you say the proof is in the pudding. But at least you are very clear in your own mind what is acceptable from your side. You have been crystal clear in this as well. Even if this whole process takes say a month or 6 weeks longer than anticipated that's still all doable.

Here's hoping for you.

Thanks!

Yeah the EA bullcrap really is frustrating and makes it hard to know what (if anything) to trust. It will come to a head when we are 'technically' ready to exchange but the developer isn't quite 100% on completion date for the vendor - then we'll see if the EA ever actually spoke to the vendor about this scenario and whether we'll be pressured at all and have to point back to the conversations we've already had blabla...

Separately, the sellers actually got in touch with us directly (found my details on my work website and called my work line as the EAs wouldn't give them our details (understandably, although I did mention to them that we hadn't been asked by the EA) to ask if we wanted of their garden stuff/furniture and were happy for us to come round and look at it etc so they know what to get rid of and what to sell, so we'll be seeing them in a couple of weeks - I think it will be pretty obvious then as to whether the EA has mentioned any of this to them.

Agreed that we have been crystal clear and we will definitely be sticking to our guns and have everything in writing so that we can point back to this being our position from the outset.

Will update this thread as time goes on and cross our fingers :)

Do keep us updated. I'm sure we're all keeping our fingers crossed for you.

Some people will disagree with me on this, but my personal preference would always be to have a direct contact with the vendors, especially where there is complexity.

The vendors can lie to you, yes, but the EA can lie to both of you and tell you different and contradicting lies, and that is even worse. Even if they are not lying, they can just fail to listen and to properly relay information.

If you can hear the vendors' perspective directly and also make your position clear directly to the vendors, there is a better chance for each of you to understand where there is scope to make compromises and where there is none.

Can you update please friendlycat? We’re in exactly this position - just had an offer agreed but the vendor’s buying a new build and wants several months between exchange and completion…

Sorry, not friendlycat, Augustusbloom!

Unfortunately new builds need quick exchange (ours was 6 weeks from putting down a deposit) so you may not be able to push back (I say you it's more they!)

We have agreed to move in with family to keep the ball rolling, some people rent but as we are similar to your sellers it's only 2 months so rental isn't really an option