Signed Contracts-can i back out?Urgent Please!

mf1 said:

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Mind you I am looking at the OP's post and just wondering : can you really really really honestly look at houses, work out budgets, organise a mortgage and still allow yourself to believe that there is a way around the f.t.b. /non f.t.b situation? Are people really that unaware? Do they genuinely not ask the right questions? Do they not understand stamp duty? Or do they choose to believe whatever glad hander tells them nice soothing stuff?

I have a sickening feeling that the answer is yes! And people wonder how solicitors make any money? I seem to spend large portions of my time dealing with naive f.t.b.'s who will not concern themselves with reality, who want everything done yesterday, at little or no cost to themselves, who will not listen to advice and then want out ( and someone to blame) when what you've told them turns out to be true?

I give up and I'm going home. Humbug!

mf

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mf


I think you were having a bad day. I know the feeling,do you reckon there might be a nice (early)retirement home for all us Bewildered Solicitors where we can while away the hours dreaming about Requisitions on Title

Why did the broker not apply for your mortgage with both parties on mortgage but only the first time buyer on title? Most lenders accept applications on this basis- I think?

This would mean that the actual title deed would only be stamped in the ftb's name thus avoiding the stamp duty? While as the mortgage is in joint names the lender would have re-course through both parties- I have heard of this being the case several times- but I am no expert.

Has anyone else heard of this?

"Why did the broker not apply for your mortgage with both parties on mortgage but only the first time buyer on title? Most lenders accept applications on this basis- I think?

This would mean that the actual title deed would only be stamped in the ftb's name thus avoiding the stamp duty? While as the mortgage is in joint names the lender would have re-course through both parties- I have heard of this being the case several times- but I am no expert.

Has anyone else heard of this?"

This has been explored ad nauseum on this Board - if you search, you will find all the issues/problems.

The first problem is with stamp duty - if you read Revenue's guide to first time buyers, it is obvious that to qualify for ftb stamp duty status, no-one else can be on the mortgage except in limited situations ( e.g. where a parent goes guarantor). Another serious issue is the status of an unnamed owner - if it all goes pear shaped, they can hardly ask a Court to honour an agreement ( be it written or oral) that the property was to be held in equity as joint owners, when the primary aim was to defraud the revenue.

mf

Yellow Belly said:

Why did the broker not apply for your mortgage with both parties on mortgage but only the first time buyer on title? Most lenders accept applications on this basis- I think?

This would mean that the actual title deed would only be stamped in the ftb's name thus avoiding the stamp duty? While as the mortgage is in joint names the lender would have re-course through both parties- I have heard of this being the case several times- but I am no expert.

Has anyone else heard of this?

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Sounds illegal. A financial construct designed solely for the purpose of avoiding stamp duty. I believe the revenue would adjudge stamp duty to still be due as both parties maintain a beneficial interest in the house.

EDIT: Post crossed with mf1

I agree with MF1 & Room305 that this sounds all wrong, but have people been getting away with this method of avoiding stamp duty? Or is it mere myth?

Yellow Belly said:

I agree with MF1 & Room305 that this sounds all wrong, but have people been getting away with this method of avoiding stamp duty? Or is it mere myth?

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"Getting away with" defrauding the revenue tends to be a matter of timeframe. No doubt many thought they had "gotten away with" Ansbacher accounts. The revenue have all of the time in the world to persue it.

Also...

Revenue acts on abuse of stamp duty relief

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room305 said:

"Getting away with" defrauding the revenue tends to be a matter of timeframe. No doubt many thought they had "gotten away with" Ansbacher accounts. The revenue have all of the time in the world to persue it.

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Some people appear to be under the illusion that unless Revenue are waiting outside the door to nab you the minute you make a false declaration that they've "gotten away" with it.

So there is a possibility that you could have an outstanding SD liability depending on your specific circumstances.

Hi just to update on the post...
I noticed a lot of people saying how naive we both were with the situation on the stamp duty...which to an extent we were.
On our first meeting with our broker our main issue was of stamp duty if buying second hand house. we were advised that there are ways around this for example one name on title two on mortgage which we thought was going to be the case or something similar.
In the last few days our broker has basically told us this is tax evasion and it is something that is being scrutinised more closely lately so its dodgy...

The end result is the contracts never left our solicitors office so we could back out. Then the vendor got in touch to say that as she wants to sell house asap as has interest in another property she is willing to refund stamp duty when we sign...
We are currently getting some documents drawn up by solicitor to cover all involved with this but can as all sides happy with this agreement we can go ahead and purchase property.

Thanks for all the advice and comments,won't be so naive and trusting of people in business in future,i'm young and inexperienced so just went through broker for helping hand but think common sense will prevail from now on.

That sounds like a great result all round, nice of her to compromise but she obviously did want to get it sold and better to refund you then have to find another buyer and maybe at a lower price.
Best of luck to you both in the new house.

Yeah we're really delighted that she compromised with us,shes a very nice lady and to be honest we were not only gutted for ourselves that it fell through buy gutted for her because we were totally committed to this sale from beginning. Realise shes losing out on money also now but if shes happy and we're happy then i'm not gonna worry too much...
thanks for luck,hopefully it'l be last house i plan on buying for good few years cos its so stressful!

suzinurse said:

Then the vendor got in touch to say that as she wants to sell house asap as has interest in another property she is willing to refund stamp duty when we sign...

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How exactly are you planning to arrange for this?

I'd ask the same: just ask for a reduction in sale price instead of messing around with refunds, which may or may not be forthcoming.

Bear in mind that (a) SD will be assessable on the market value so if the discount is significant the SD will still be assessed on the higher fair market value and (b) if she refunds you cash directly then there could be Capital Acquisitions Tax/Gift Tax implications. Also the FTB partner will be able to claim a full 7 years of owner occupier mortgage interest relief at the higher rate but the other will only be able to claim this for as much of the 7 year period as remains.