Contracts exchanged, mortgage drawn and seller won’t move out

[dfg75]

We exchanged contracts four weeks ago on a home. The seller put in a clause in the contract stating the keys must exchange within three weeks or their would be penalties for us. We signed on as we were happy to move things on quickly. Our solicitor told us to schedule a pre-inspection. The estate agent for the last week have said they lost the keys and they are waiting for the owners (who live in the UK) to come back in town with a new set of keys. My solicitor pressed again to arrange pre-inspection as the three week period was ending. The deposit has been paid and now the mortgage has drawn down. I contacted the estate agent and asked if he could get a copy of the keys DHL’d today as not to further delay the process. The estate agent said the seller is back in Dublin and has chosen not to given the estate agent the keys. I am quite confused what the strategy of the seller is.

On the same day the estate agent said the seller had taken back keys and was not allowing access, the seller’s solicitor rang our solicitor and said the seller hid a 2nd mortgage from them and that the contract was delayed pending her investigation with BoI.

To add to the complication, my solicitor is having a baby and will be on paternity leave at the end of the week for a couple weeks.

My question is what can I do now? The contract has been breached and the seller and estate agent seem to be messing. I am paying a new mortgage, house insurance and life insurance on a property I cannot access or get keys to. My solicitor wants me to submit a cheque for his fees and stamp duty immediately even though nothing is moving forward.

Can we back out of the contract and get our deposit back since the seller is in breach of contract? What fees and costs are we entitled to claim back from the seller? Any advise appreciated.

 

[Leo]

Your solicitor looking for fees and stamp duty prior to closing isn't a good sign, you really need to work with them on what your best course of action is from here.

It seems the other party want to withdraw from the sale, are they seeking the penalties you mention? Does the contract even state what these might be? Likely tricky to enforce if they are not specific.

What is the estate agent saying about the deposit?

If you want to push the sale through, you have the option of taking action for Specific Performance of the contract. This will incur additional legal fees and a degree of risk, and perhaps take a few months, so a good relationship with your solicitor is vital to ensure you make an informed decision.

 

[Early Riser]

Your solicitor looking for fees and stamp duty prior to closing isn't a good sign, you really need to work with them on what your best course of action is from here.

Why on earth would the solicitor be looking for fees when the job is not complete (one way or the other)? No way would I be paying this now. The solicitor needs to sort this out - either personally or via a colleague/locum. Looking for fees now would make me suspicious.

 

[Sunny]

Did your solicitor not advise you not to draw down the mortgage until this was sorted? You should never have drawn down the mortgage if you were still waiting for pre-inspection. They would never have been able to enforce the penalties if the delay was down to them denying you access. Who has the mortgage funds? Your solicitor, their solicitor, the seller??

 

[dfg75]

Your solicitor looking for fees and stamp duty prior to closing isn't a good sign, you really need to work with them on what your best course of action is from here.

It seems the other party want to withdraw from the sale, are they seeking the penalties you mention? Does the contract even state what these might be? Likely tricky to enforce if they are not specific.

What is the estate agent saying about the deposit?

If you want to push the sale through, you have the option of taking action for Specific Performance of the contract. This will incur additional legal fees and a degree of risk, and perhaps take a few months, so a good relationship with your solicitor is vital to ensure you make an informed decision.

Thanks Leo. My solicitor seems to be very busy with court and his new baby on the way so his focus seems to be away from this matter entirely.

The penalties in the contract stipulated in rates, solicitor fees, expenses, interest, etc. The vendor is not looking for penalties as they are the ones in breach of the contract.

The estate agent says he acts for his vendor, at his direction and to protect his interests (which is fair enough), but does not give any indication of what the underlying issue is. Our solicitor says talk to the agent and the agent remains vague and is inconsistent in his explanations.

When you refer to Specific Completion is this the 28 day completion order?

 

[dfg75]

Why on earth would the solicitor be looking for fees when the job is not complete (one way or the other)? No way would I be paying this now. The solicitor needs to sort this out - either personally or via a colleague/locum. Looking for fees now would make me suspicious.

My thoughts exactly RE: solicitor fees. If the contract is not being closed out, I am not paying stamp duty and land registry fees. We will certainly pay him for the time he has in but we need the job completed one way or the other before his fees are paid.

 

[dfg75]

Did your solicitor not advise you not to draw down the mortgage until this was sorted? You should never have drawn down the mortgage if you were still waiting for pre-inspection. They would never have been able to enforce the penalties if the delay was down to them denying you access. Who has the mortgage funds? Your solicitor, their solicitor, the seller??

My solicitor advised a drawdown to be in his account before we were in breach of the conditions of the contract. The He was told by the vendors solicitor the pre-inspection was going to be completed in time so he had the drawdown initiated. In retrospect, this was very poor advice. The mortgage funds are with my solicitor at the moment. I am due to speak with my solicitor when he is out of court this afternoon.

 

[Sunny]

My solicitor advised a drawdown to be in his account before we were in breach of the conditions of the contract. The He was told by the vendors solicitor the pre-inspection was going to be completed in time so he had the drawdown initiated. In retrospect, this was very poor advice. The mortgage funds are with my solicitor at the moment. I am due to speak with my solicitor when he is out of court this afternoon.

So the mortgage funds are sitting in his account with nothing sorted and he is sending you a bill for fees and stamp duty? Wowsers!!

 

[dfg75]

Yes. My thoughts as well. I thought it was a bit rich - especially with this going on hold for a few weeks whilst his office is closed.

Is there a cooling down period for a mortgage like other contracts whereby we can return the funds whilst we wait to see where this ends up?

 

[Sunny]

Your solicitor needs to get this sorted. Courts and babies are no excuses. You are very exposed here. The bank has an issue here as well but I wouldn't involve them for the moment. They are have released the mortgage but they have no security on it. Your solicitor needs to get to the bottom on what the issue is with the sellers solicitor and then sort it or fix the mess some other way. Sounds like you need to get firm with this.

 

[EmmDee]

The penalties in the contract stipulated in rates, solicitor fees, expenses, interest, etc. The vendor is not looking for penalties as they are the ones in breach of the contract.

Check out the penalty clause the seller asked to be inserted - it would be "odd" if a penalty clause was accepted by your solicitor in negotiation that wasn't bilateral i.e. you pay penalties for failure to close but not vice versa. If that isn't part of the clause, I think you have to have a secondary discussion with your solicitor - it would seem a fairly big oversight.

Secondly - ask your solicitor (or look yourself) at the representations and warranties in the contract. I would expect that the seller represents that they have been open about facts and in a position to sell. If they are now saying they are not in that position, it leaves them open to a breach of contract case. If you really wanted to layer in pressure, I would raise the question of whether their lawyer had performed necessary due diligence in allowing them to sign.

You are unlikely to want to pursue a civil case - but neither will they want to defend one. So the points above may push them into completion if they are just acting the ass

 

[elcato]

Re-reading your original post, it appears that the sellers solicitor has sussed out that there's a problem here with getting the current mortgage redeemed on the house (with BOI). This means that trying to push a sale through quickly will not work as BOI hold the deeds. You need to get your solicitor to return the mortgage funds to your bank till required. You could probably suck up the Life insurance and then try and bill the seller later.

 

[dfg75]

I just received a call from my solicitor. He says the extra mortgage has been sorted and is now demanding the balance paid to the vendors solicitor and his fees be transferred today. (Note: The mortgage was small relative to the sale price so this accounts for 70 percent of the purchase price.) I asked about the keys and getting access for the pre-inspection and he says it will happen and to trust him. I am hesitant to throw more of my money at this until we have keys available and the pre-inspection completed. Thoughts?

 

[Sunny]

Trust him on what? Is he looking for the balance so he can transfer to the sellers solicitor? If he is, he must be able to tell you more than 'trust me'...

If you transfer the money, it the sale being closed and keys being handed over??? If not, I wouldn't transfer anything...

 

[elcato]

This is common practice. I paid cash for a place and had to hand over the remaining balance and fees before keys were got. I honestly don't know what you meant by final inspection as I don't recall anyone get this before. I've heard of lots of stories about stuff being left behind or stuff missing but in the greater scheme of things you get on with it and suck it up as it's minuscule compared to the price of the transaction.

 

[Sunny]

This is common practice. I paid cash for a place and had to hand over the remaining balance and fees before keys were got. I honestly don't know what you meant by final inspection as I don't recall anyone get this before. I've heard of lots of stories about stuff being left behind or stuff missing but in the greater scheme of things you get on with it and suck it up as it's minuscule compared to the price of the transaction.

Yeah it is common but what is not common is a solicitor advising to draw down a mortgage without closing. I also don't understand why he is asking for balance unless the solicitor is a position to close with the selling solicitor. If they are still talking about 'inspections' taking place, I would be suspicious that everything actually is in position to close. Especially if he is about to close his office for a period of time...….. The OP needs to a straight answer. If he provides the balance of funds, is the transaction going to close on the same day. If he wants to go down inspections etc, that is up to him but I agree whether it is necessary. The contract should include what condition the house is left in.

 

[mf1]

Conveyancing transactions rely hugely on large elements of good will and trust.

Things can go wrong and it sounds as if the issue was with what are called "redemption figures" ( what is the total amount of money secured on the property which has to be available to the Vendor's solicitor before the Vendor's solicitor can complete a transaction).

Completion occurs, by telephone/email/face to face agreement between the two solicitors, some time after the Contracts are signed by both, when the entire sale funds are in the Vendor's solicitors account, the keys are available to be released to the purchaser, the closing documents (all in order) are with the Purchaser's solicitor and the searches are clear.

I always advise purchaser's to do a pre-closing inspection- the day before or the morning of- there is no point completing and then discovering that the rotten vendor has left bags of rubbish in the attic/back garden , removed all the light fittings or, in one spectacular scenario, removed all of the Japanese elements from the Japanese Garden which was a big feature in the price agreed. It is rarely worth taking any action to resolve these matters- best to try and head them off.

And most purchasers' solicitors insist on their fees, outlay and the stamp duty being paid to them before completion.

mf

 

[Leo]

When you refer to Specific Completion is this the 28 day completion order?

Specific Performance, you have the option of taking legal action to seek that the court order the vendor to meet the obligations of the contract. Depending on the value of the property this action might need to be taken in the High Court.

The estate agent says he acts for his vendor, at his direction and to protect his interests (which is fair enough), but does not give any indication of what the underlying issue is.

The agent is legally obliged to act in their client's interest. It's not in the agent's interest to mess you around, so they may not be getting the information you want from the vendor. Trust your solicitor, they've likely been through this process very many times and will steer you right.

 

[Sunny]

Conveyancing transactions rely hugely on large elements of good will and trust.

Things can go wrong and it sounds as if the issue was with what are called "redemption figures" ( what is the total amount of money secured on the property which has to be available to the Vendor's solicitor before the Vendor's solicitor can complete a transaction).

Completion occurs, by telephone/email/face to face agreement between the two solicitors, some time after the Contracts are signed by both, when the entire sale funds are in the Vendor's solicitors account, the keys are available to be released to the purchaser, the closing documents (all in order) are with the Purchaser's solicitor and the searches are clear.

I always advise purchaser's to do a pre-closing inspection- the day before or the morning of- there is no point completing and then discovering that the rotten vendor has left bags of rubbish in the attic/back garden , removed all the light fittings or, in one spectacular scenario, removed all of the Japanese elements from the Japanese Garden which was a big feature in the price agreed. It is rarely worth taking any action to resolve these matters- best to try and head them off.

And most purchasers' solicitors insist on their fees, outlay and the stamp duty being paid to them before completion.

mf

Surely you wouldn't advise a client to draw down the mortgage when there were still outstanding issues? I don't understand why you would until the vendor solicitor has come saying all is in order to proceed and they are in a position to close from their side. I understand things go wrong and the timings are tight but I would rather delay the closing by a day because the bank didn't release funds in time than draw down a mortgage and have it sit in my solicitors account while sitting nervously wondering if the issues were going to be sorted.

There is no problem paying fees and stamp duty on the day the transaction closes. But asking for stamp duty and fees while sitting on the mortgage amount in your account with no indication of closing date apart from 'trust me' doesn't sound right to me.

 

[mf1]

It can take quite some time to draw down mortgage funds- it's not instantanaeous.

And from the OP's original post, it sounds as if everything was falling into place before the issue of the second mortgage came up?

mf