# New house going to arbitration



## firsttimebuy (22 Oct 2007)

I am looking for advice and just wondering if anybody has been in the same situation? We have been served with a 28 notice of completion a new house but we are having major issues with the builder. Some of the snags on the list the builder is refusing to complete as he is saying our engineer is being unreasonable. There are 2 major problems a water damaged ceiling from the overflow pipe in the bathroom and fire regulations not being fully met in the attic. There are also several minor issues which in our contract we can't hold up the closing of the house, it can only be held up for major defects.
The solicitor says the next step if we and the builder can't agree on the snag list is arbitration. Does anybody know what is involved or what the costs could be? Or is there any alternative to this? Any advice is appreciated?


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## Stifster (22 Oct 2007)

If you can't reach agreement then the cheapest route is by way of arbitration. The costs will depend on the amount of work involved and would be hard to estimate.

I'd be having a serious chat with your engineer and before you go down the arbitration route have a third party do a snag. It would be a lot cheaper to get a second opinion at this stage.


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## MOB (22 Oct 2007)

"The solicitor says the next step if we and the builder can't agree on the snag list is arbitration."

If this is a standard Law Society building agreement, there are two dispute procedures; the first of these is a dispute as to whether defects are major or minor (you can not refuse to complete if they are minor and if builder undertakes to rectify - oddly the standard contract is silent on what do to if he refuses to so undertake)

This dispute as to whether or not defects are major must be referred to an Expert, not an arbitrator.  

Separate to this, there is a general provision for arbitration on other differences.


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## mickeyg (22 Oct 2007)

MOB, you seem quite familiar with the legal aspects of closing and I would like to ask a question in this regard. If the seller has indicated a closing date of 28 days does completion have to happen before the expiry of the 28 days. Are there any obvious circumstances where the purchaser can delay beyond this or is the seller in the driving seat and can keep the deposit if closure doesn't happen by the indicated date?

m


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## MOB (22 Oct 2007)

The standard contract provides for a completion notice (often called a 28 day notice) and if such a notice is validly served, then the buyer is indeed at risk of losing deposit if they do not complete within the notice period (as well as being sued if vendor re-sells at a loss) .  There can be disputes about whether a notice is valid; there can be disputes about the date of service; but by and large there are very few loopholes.  You would really need to get advice specific to a given transaction -there are no general observations I could make which would be very helpful.


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## ClubMan (22 Oct 2007)

mickeyg said:


> MOB, you seem quite familiar with the legal aspects of closing


_MOB _is a solicitor!


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## firsttimebuy (23 Oct 2007)

Thanks MOB. There are 2 items on our Engineers report that he considers major and has advised our solicitor of this. I just have a few questions who appoints the expert? and is it the case if the expert agrees with our Engineer then it would go to arbitration? Also would you have any idea of the costs involved as we would obviously have to take this in to consideration?


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## MOB (23 Oct 2007)

I just have a few questions who appoints the expert? and is it the case if the expert agrees with our Engineer then it would go to arbitration? 

The expert is appointed by agreement or in default of agreement by the President of the Law Society or the President of the CIF (can't just recall which off the top of my head).   The ony result of the expert's finding is that if the defects are major, you are not obliged to complete the purchase until the defects are fixed.  Bear in mind please that I am talking about what generally applies; I have not seen your contract and cannot say that it is in the exact same form as the 'standard' form to which I refer.  You really should be getting comprehensive advice on this from your solicitor.


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## mickeyg (23 Oct 2007)

MOB said:


> The standard contract provides for a completion notice (often called a 28 day notice) and if such a notice is validly served, then the buyer is indeed at risk of losing deposit if they do not complete within the notice period (as well as being sued if vendor re-sells at a loss) . There can be disputes about whether a notice is valid; there can be disputes about the date of service; but by and large there are very few loopholes. You would really need to get advice specific to a given transaction -there are no general observations I could make which would be very helpful.


 
Thanks MOB. Unlike FirstTimeBuy the transaction I am referencing is land purchase so does not have any "complications" or issues which may arise in a house transaction. The Standard Contract to which you refer is I presume the binding contract which has been signed by both parties and contains within it the closing date?


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## MOB (23 Oct 2007)

In the context used, I was indeed referring to the "binding contract which has been signed by both parties and contains within it the closing date?"


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## foxylady (11 Jul 2008)

MOB said:


> In the context used, I was indeed referring to the "binding contract which has been signed by both parties and contains within it the closing date?"


 
MOB in your experience has a purchaser ever been successful in serving a completion notice on vendor?


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## Stifster (16 Jul 2008)

foxylady said:


> MOB in your experience has a purchaser ever been successful in serving a completion notice on vendor?


 
What would you define as a success? Closing the sale, recovering interest or both?


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## Leo (17 Jul 2008)

foxylady said:


> MOB in your experience has a purchaser ever been successful in serving a completion notice on vendor?


 
I was!
Leo


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## foxylady (17 Jul 2008)

Leo said:


> I was!
> Leo


 
In what way were u successful , my case is of deposit being returned if property is not completed


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## Leo (18 Jul 2008)

foxylady said:


> In what way were u successful , my case is of deposit being returned if property is not completed


 
In my case, the vendor tried to pull out of the sale after contracts were signed, I initiated proceedings to force through the sale. Cost a few grand, but was successful in achieving the closure before it got to court.
Leo


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