Remind me pls: long exchange to completion

[KievLoverTwo]

I know there have been a few recent threads and I even contributed (“2 mths? Tell them to stick it!” - I think that one was with a vendor who was being horrible). My google fu is broken.

Vendors confirmed yesterday that they can’t leave England until the end of the year so we are looking at an early to mid Jan move. Their lawyer friend suggested we could complete months before (I guess they are trying to offer us some security - it could be 2-3 months before completion). I am trying to remember why this might be a mistake but I might be wrong on ALL fronts:

Banks don’t like it (? Why)

We are responsible for the condition of the property from exchange

Buildings insurance payable??

Death

a.n.other?

My brain is so fuzzy at the stress of being stuck in this bloody rental for another seven months that I can’t think straight.

What are the advantages of early exchange? What are the repercussions for the vendor if they pull out after exchange?

There are no EAs involved and we are in touch all the time, I think it’s highly unlikely - I guess I am trying to gauge what the point of doing it is, really. If the answer is only that “sellers can’t be trusted” - these ones can. Although I would be a fool to never say never.

Tyvmia.

I had about a month from exchange to completion and I just insured from the day I bought it and they added post exchange insurance free of charge.

I think the disadvantage is you have to sell/buy even if your circumstances change in between.

Usually the penalty for not completing after exchange is 10% of the value of the sale, but I imagine that, like almost all contract terms, can be changed.

I think it's to with with the longer between exchange and completion, the more likely something might happen which could prevent completion happening - and as both sides are contractually committed to complete from exchange, this could be very expensive (plus presumably if there is any sort of chain, the knock effects aren't great).

When we bought our first place in 2007 we had three months between exchange and completion and noone batted an eyelid - it suited both us and the seller (for reasons that I now can't remember!)

On our recent purchase we wanted a month, as did our buyers because they were renting, and we wanted a decent amount of time to get everything in place. Our seller was a right pain about it, even though he was the one who had been dragging his feet the whole time to find an onward purchase.

One of the issues, afaic, is that post exchange you are legally bound to buy the property, but the mortgage company can still change the rules, and decide you are no longer able to take out the loan (thinking - job loss, new government, new rules etc).

Would the vendors consider them going into rental for 6 months?

Oh crikey. So, in a doomsday scenario:

Partner gets made redundant- single income household

Have to tell lender cos it is in the t&cs

They pull the mortgage (even with significant savings in the bank and good job prospects, I assume)

We still have to buy the house, but now we have no mortgage

??

They have a massive dog so can’t. Would be impossible to find a rental that will take a dog in a town instead of the countryside these day. We have had a horrid time just with cats.

We always thought it might be this long but they have been getting our hopes up with “might be able to change jobs a bit and work remotely” but now that’s just not possible til year end.

We had a five month gap between E&C when we were selling, buyer agreed and it worked fine for both parties.
Gives reassurance at an otherwise stressful time plus it allowed lots of time for making other arrangements (leisurely packing, booking the removal company of choice on the required date etc).

It's really not advisable to have such a long delay between Exchange and Completion because once you have exchanged you are legally committed to buying the property but something could go wrong in the period in between.

I'm not sure of all the implications myself but off the top of my head I believe you would need to be paying for buildings insurance all that time. I also believe you would need to pay them money if you were forced to withdraw (a deposit of about 10% is normally paid by the FTB at Exchange and I think you would lose that but check with a solicitor).

Obviously it can work out but it is a risk most people don't want to accept. If you really like the house it may be better to agree a price now but wait until September say before starting the legal process of buying it, so you could both work towards Exchanging in December with a completion date in January.

I wonder whether you can insure against a change of circumstances between exchange and completion?

It obviously wouldn't be ideal and I would suspect it might require a broker but you can insure against almost anything if you'll pay. It would depend how high the premium is but it might be a cost worth paying if it means you can have the security of having exchanged while mitigating the associated risks.

That’s a good thought, thanks.

Wouldn't your mortgage offer expire by then?

No answers, but I've been facing a similar situation and questions I am still not clear on include - what happens about mortgage because offers are normally valid for 6 months?
What do you do about survey - condition now does not necessarily equal the condition after another period of winter weather (or another 6 months of a big dog living in the house).

Plus exchange now would tie you in to an agreed price - but what if the property market slumps in the next 6 months. Would you still be happy paying the price agreed now?
Not exchanging now however, means if the market suddenly surged, could the seller suddenly demand more from you and/or gazump you?
And what would happen with mortgage company - is there a risk they get worried about the chances of a reduced value and a change to the LTV? Maybe exchanging now prevents that? I don't know! But these are the sort of questions that I'm wondering about.

I have a suspicion though that an early exchange benefits the seller more than the buyer.

Would it not make more sense to keep this one on the back burner and look at other properties? They're being unreasonable keeping you waiting this long so if you find something better in the meantime that's their problem.

.

Vendors confirmed yesterday that they can’t leave England until the end of the year so we are looking at an early to mid Jan move.
What do you get out of this? - I'd renegotiate the price! And look into insurance as mentioned by ineffable.

But string them along, don't commit yet and see what else is out there.

Hi @senua, for some reason, @muminwestlnd bumped this thread with nothing but a fullstop.

It's almost a year old.

We didn't proceed with buying the property so the issue ceased to be an issue in the end.

My suspicions re: why they were asking for such a long time between dates is because some banks will give bridging loans at a much more preferable rate once you've actually exchanged, so they could get access to other money 3 months before completion at a far less eye watering rate than with other bridging loans.

Thanks for the advice anyway. I'm sure the thread will stand someone in good stead at some point in the future.

Oh, sorry about that. I hadn't clocked the date!
I hope that you are sorted now.