To pull out of purchase or not?

[lalah20]

Hello everyone, for context I am 30 and a FTB in London. I am currently living at home with mum and have been able to save up a deposit for a flat because of this.

Back in September I viewed an amazing amazing 2 bed flat in South Croydon - it is a duplex in a Victorian house conversion, stunning interior and genuinely massive. Made an offer straight away and that offer got accepted. Long lease and vacant + chainless. Very quickly got my mortgage approved and got a good solicitor to do my conveyancing.

Recently my solicitor gave me an emergency phone call to inform me that he discovered that it will be a subsale/flipped purchase. It turns out that I am not buying directly from the current owner - instead I am buying it from the estate agent who is buying it from the current and original owner and selling it on to me the very same day. This was not made clear to me at all at any point by the estate agent. It is utterly unprofessional and dishonest behaviour.

Anyway, the current issue is that my lender will 95% refuse to release funds as it is a flipped sale and they require the current owner to have owned the property for a minimum of 6 months. My solicitor has had to report to Nationwide. The middleman's (estate agent's) solicitor is refusing to provide information for the following enquiry: how much he is paying for the property. This seems very fishy and it is clear that he is flipping the property to make a profit - very unethical when the original seller could be getting the full amount I am paying OR I could be paying what the EA is paying for it. In addition, the estate agent was not totally honest about service charges, however I liked the property enough to not be put off by it.

I viewed two new properties just before Christmas and really liked one of them (maisonette, recently refurbished, no service charge or ground rent). Have decided I will make an offer after the new year.

I am on one hand tempted to see what Nationwide will say and perhaps just continue with my original purchase (if they even agree to release funds!) purely because I have spent time and money (nearly 3k!!) on the purchase through surveys and conveyancing. On the other hand, I have self respect and don't like doing business with people who lack openness and integrity. Furthermore there are plenty of flats for sale and I have my pick.

What would you do in my position?
and: How could I get the seller to pull out rather than me pulling out? Reason I ask is because if I pull out I will not be able to claim homebuyers insurance and I absolutely deserve to get some of the money back as I have been strung along and lied to this entire time!

Good luck with the new offer, OP.

Is the maisonette in a block or a conversion?

I lived in a leasehold flat and we all (5 flats) had a share of the freehold and were directors of our own management company, so paid a regular amount into a maintenance fund and all agreed when things needed doing. No external party putting up charges etc, and we could, of course, extend our own lease without cost.

Have you ever heard of a website called RightMove? It gives the history of sales of properties since 1995, including flipped sales.

It’s not always up to date. It’s usually at pest ten months behind land registry and they can take anywhere from six weeks to over a year to complete registrations at the moment,

That willl mean that the mortgage offer will be rescinded.

I’m confused about this. Whose names were on the memo of sale?! You didn’t offer to buy it off the estate agent.

I have to say, I didn’t think I could dislike estate agents more than I already do but this is outrageous! The estate agent is getting to screw both you and the seller over at the same time!

I know right...estate agents are a different breed but this is some next level fraudulent behaviour! The estate agent's name was on the memo of sale, but I didn't realise that was his name. Nevertheless he should have disclosed it. I am actually worried because he has my address and my proof of deposit! Going to shift my savings to another account now. Bloody hell 😂

I have found the owner on LinkedIn and Facebook - do you reckon I should message her or is that too invasive?

Thank you - It's a house conversion.
Praying my offer gets accepted 🙏🏽

OP - I would stay out of contacting the current owner, except via yours and hers solicitor.

Just leave it all very official now between your solicitor and your insurance claim - and making a complaint as appropriate.

Why wouldn’t you contact the owner though? As long as any contact is clear and factual and polite, what is the worst thing that can happen? If they really are in Australia they may have no idea what this estate agent is up to! If I was in that position I would love to know what was going on, especially if the buyer was about to pull out and buy somewhere else.

I would also be wary about using the solicitor to do much more - they will be hugely racking up the fees. And if the OP wants to follow up on this estate agent’s behaviour with the estate agency, professional bodies etc (and she totally should), she doesn’t need a solicitor to do that.

Good luck OP. Sounds like a good idea to walk away from this one.

I would also be wary about using the solicitor to do much more
That seems a bit unfair, considering that it was the solicitor's diligence that uncovered the EA's duplicity. Stick with them for conveyancing but maybe do other stuff yourself.
The solicitor may not even want to be involved in pursuing the EA as it's not in his interest: I bet it's a small world where he/the EA operate in, and it's not a good business model to bite the hand that feeds.

I wouldn't contact the owner because personally I generally like to keep the drama down, because there doesn't seem to be any benefit to the Op in contacting the owner (who will presumably know anyway because the chain will show the whole process and her solicitor will know - the EA's purchase is seemingly dependent on the OP's purchase or else they would have just bought it as a cash buyer) , and because there could be unintended consequences. If , for example, there is some dodgy business here that actually involved a deal between the owner and the EA. Maybe to do with money laundering and taking money out of the country. And the owner would forewarn the EA about a formal complaint etc.

When I sold a house once , to a developer, they wanted to buy it through some offshore trust and our solicitor said not to sell to an offshore trust. There might be something like that going on.

Mainly, unless there is a direct benefit, don't bother with the drama.

This seems a complicated legal area - it is not clear to me if the EA is doing anything illegal just that your bank won't release the funds on the basis of the six month rule. On this basis, as well as the lack of transparency around the charges, I'd pull out. (However, the 'as and when' arrangements with the new property would also make me nervous.)

I cannot see how the original owner doesnt know about this. EA could even be linked to them in some way.

Did your solicitor say how common this is?

Also I agree 100% with @FollowSpotanalysis.

True, there's no benefit in contacting her as I no longer wish to buy the property. I'm certain she knows what is going on as there was direct transfer form ready to put the property in my name from hers.

Solicitor said this is the first time it has appeared in his career as a conveyancer and that it is only common for a property to be owned less than 6 months when it is renovated and resold. He is very sure the EA is making a profit because of his solicitor failing to disclose the purchase price.

I would report the EA to the property ombudsman and ask for the money you have spent so far to be reimbursed.

I'd also report the Estate Agent. Twonks like this make life more difficult &costly for everyone else.

Will definitely do that. I called them and they require me to firstly make a complaint to the EA. Don't know how that's going to go down. Also...I sent proof of deposit to the EA and I am shit scared now. I want to move that money to another savings account - what do you think?

Make the blandest possible complaint, give them 7 days to respond, then escalate it to the ombudsman.

But you could also contact Trading Standards as this really is sharp practice.

What did you send as proof of deposit? There isn’t much they can do with a bank statement. Presume you redacted a portion of the account number for security?

I dotted out some digits on the bank statement, but as it's a pdf you can just highlight the text and paste it to know the numbers. Stupid, I know, however like you said there's not much they can do with a bank statement

@lalah20 I would be very surprised if they can or would do anything with that 🙃

The estate agent called me today. I didn't recognise it was his number so I stupidly picked up the phone. He wanted to know if I'd spoken to my solicitor. I informed him that over Christmas, nationwide contacted my mortgage advisor (solicitor was on Xmas hols) to notify that they would be unable to confirm release of funds without knowing the price he (estate agent) is paying for the flat. He then said "my solicitor is willing to reveal the price on the day of exchange" 😂 😂 as if my solicitor would allow exchange to take place without confirming the release of funds! I would lose my deposit in such a case. He then said "the price is of no relevance to you, your bank have agreed to lend you ___ and that is all that matters" to which I replied "sadly that isn't how it works. If this was a normal sale and I was buying from the current and original owner there would be no issue. However, whenever there is a flipped sale/subsale nationwide carry out anti-fraud checks and this involves knowing the price the person in the middle is paying for the property". The really tricky thing now is that I will have to formally complain to the EA before I can escalate to the ombudsman. The registered director of the estate agents is in fact the person who is flipping the sale - so awkward and useless for a complaint to be directed to them. This whole thing has been conducted in a deceiving way to deflect blame. The EA said "we do this all the time" and "your solicitor should have told you about it beforehand".

Trading Standards

I wouldn't complain to him directly.

The registered director of the estate agents is in fact the person who is flipping the sale - so awkward and useless for a complaint to be directed to them.
The important thing, in complaints, is to follow procedure. Find out the correct steps and apply them, even if it feels daft. Otherwise you may lose out on a technicality.

Get everything put down in writing (e.g. make yourself a full memo of the above conversation). And note dates.
Good luck.