Deal falls through after mortgage drawn down

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deeobrien

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Hi All,

So the sky has fallen in!! I went sale agreed on house at the start of July. Contracts were received about 2 weeks later with a closing date of the 24th August. With agreement the closing date was pushed out a week to the 3rd September. There was an small issue with the map with land registry. Due to the sellers solicitors holidays it took a few weeks to get sorted. It meant the contracts didn't get returned to the seller until Tuesday 28th.

The mortgage requisition went in last week and the mortgage was issued on the 30th August. The sellers solicitor confirmed they were ready to close several times last week and that the seller was going in yesterday to sign everything. They said it would most likely be today before it would close. It turns he not yet signed the contracts.

Today disaster struck - the seller has apparently changed his made. He reckons he can get more money. I know he is entitled to pull out (although I can't figure out why he left it till the last minute). I am devastated to say the least.

My primary concern now is the mortgage. My solicitor still has the funds and says they can go straight back. She says there may be a few days interest. However its a 5 year fixed rate mortgage so I assume there is breakage fees? I'm surprised my solicitor requested the mortgage without the signed contracts. Is that normal?

Apologies for the long post! This is going to cost me (engineer's fee, solictor's fee, mortgage fee's, insurance policy's) and that might prevent me being able to buy another house, assuming I find another suitable one. I'm so upset!!
 
That is tough. But tell the lender immediately. There should not be much of a break fee if any.

Even if there is, you have to return the money, so tell your solicitor to return the money.

You can probably cancel the insurance policy or transfer it. Not sure what the "mortgage fees" are.

Brendan
 
A truly horrible situation to find your self in.

Unfortunately, although quite rare, this does happens time and again.

Sometimes the buyer will at the last minute pull the plug, causing untold grief in a chain of events and so on.

Unfair as it is. it could easily have been you who pulled at the last minute, and the seller could not have done a dam thing about it.

I think your best approach is to assume the saying, that it wasn’t for you and that, it happen for a reason, as of yet not clear.

Most solicitors would be fair with their billing in such circumstances as they know, most likely you will return to them, like surveyors, you will most likely get a decent discount to engage them again.



Get back on the horse and move on and don’t let it consume you.
 
Have you actually exchanged contracts? In other words, has the seller returned a signed counterpart of the contract to your solicitor?
 
No, the seller had not returned the contracts. They were to be signed with the closing documents yesterday. So I know the seller is entitled to walk away - I'm just not sure why he waited until the 11th hour. If he had pulled out last week I would still have been devastated but at least the mortgage wouldn't have been drawn down.

I was a bit surprised my solicitor had drawn down the mortgage without having got the contracts back from the seller, but I assume she did it as the closing date was fast approaching. Nothing from the other side gave any indication that they were changing their mind.

I did wonder was it a last minute shake down - but I don't have anymore money to give :)
 
I really feel for you.
But, if it was a last minute shake down, and they come back to you (unlikely I know), drop your offer by the amount it has cost you, and then some!
 
Unfortunately, this is happening more often these days. People go sale agreed on the property. While the legal work is being carried out, someone down the road puts their house up for sale and gets €50,000 more for it.
 
He told the auctioneer to re list it for €50,000 more. The auctioneer says she is not going to handle the sale. He doesn't appear to need to sell or need the money (house is unoccupied) so there is no guarantee he will ever close.

I just felt I ended up in the worst possible scenario. Its not the end of the world I know and I'll get over it! It might just take a few days.

So now its down to the business of returning the mortgage and figuring out the cost of repaying a 5 year fixed rate early. Hopefully they will be kind and my application will still stand or at least will give me approval again. Nothing has changed in my circumstances but I did need an exemption on the 3.5 income multiplier (for that particular house at least. Anyway we'll return this one first and then figure out next steps.

Thanks all.
 
deeobrien said:
The auctioneer says she is not going to handle the sale.
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Fair play to the auctioneer. I had a chat with an auctioneer recently who told me about a house gone sale agreed for €900k and then someone else came in later and offered €950k. I challenged the auctioneer on the ethics of this and they said that in law, he had to convey the bid. I told him that was correct, but he should have advised the seller not to accept it. I may as well have been speaking a different language.

Brendan
 
deeobrien said:
He told the auctioneer to re list it for €50,000 more. The auctioneer says she is not going to handle the sale. He doesn't appear to need to sell or need the money (house is unoccupied) so there is no guarantee he will ever close.

I just felt I ended up in the worst possible scenario. Its not the end of the world I know and I'll get over it! It might just take a few days.

So now its down to the business of returning the mortgage and figuring out the cost of repaying a 5 year fixed rate early. Hopefully they will be kind and my application will still stand or at least will give me approval again. Nothing has changed in my circumstances but I did need an exemption on the 3.5 income multiplier (for that particular house at least. Anyway we'll return this one first and then figure out next steps.

Thanks all.
Click to expand...

Once it goes back up submit an offer below your previous agreed bid and leave it there while you look elsewhere. Make the point you're continuing to look elsewhere. The bank shouldn't have an issue cancelling the mortgage and I'd be highly surprised if you had any breakage costs.

The selling season has just opened up again so a lot of properties have just been listed in the last week after the summer is over. Your seller might have seen a comp that was higher in the last fortnite.

From speaking with estate agents recently, the market has cooled in Dublin at the upper end. Prices are not rising and buyers are taking a minute now while they digest all the recent negative reports that have been released to the media.
 
I’m aware of quite a number of situations where people had agreed to sell at X only to be offered X plus Y and turn it down; your word is your bond.
 
That's tough Deeobrien, but there might be another angle you may like to pursue in getting this house depending on your living/renting situation at the moment. Is it possible for you to rent this property for a while thereby giving the seller some money as his property is empty. He may want to rent to a person who's also wishing to purchase the property. I know the market could go up in price, it could just as easily go down. I'm sure a solicitor can draw up a contract to cater for this. Might be worth a try if you really want the house. Just an idea?
 
Brendan Burgess said:
Fair play to the auctioneer. I had a chat with an auctioneer recently who told me about a house gone sale agreed for €900k and then someone else came in later and offered €950k. I challenged the auctioneer on the ethics of this and they said that in law, he had to convey the bid. I told him that was correct, but he should have advised the seller not to accept it. I may as well have been speaking a different language.

Brendan
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The auctioneer/ estate agent works for the vendor, not the purchaser. Of course they have to notify the vendor of a higher bid.

And with the sale of the family home being a tax free sale, that extra €50,000 is a lot of money to turn down.

Just saying...;)
 
SBarrett said:
The auctioneer/ estate agent works for the vendor, not the purchaser.
Click to expand...

Even if they are auctioneers, there should be professional ethics involved. They should advise their clients to honour agreements they reach.

But just to be clear, I would have no problem at all pulling out of a deal where the buyer had messed me around.

Brendan
 
I just spoke to someone from one of the banks about this. He said that the mortgage/cheque should be cancelled without any breakage fees for the fixed rate. Your solicitor can just explain what happened and there should be no problem. Shocking behaviour by the vendor, though, and it also shows that solicitors should never request mortgage funds without complete certainty that signed contracts are in place.
 
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So good news it looks like the bank are being very agreeable. The solicitor explained the story and there are a few procedures to follow but they will not charge anything. So that's a relief. I haven't talked to my own solicitor about her fees yet. I just wanted to get the mortgage sorted first.
 
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