What happens if bank won't advance funds?

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j26

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My niece is planning on buying a property which has been in an empty, unfinished state for a number of years.
What is the position regarding the contract if a post-contract survey revealed a structural defect, and the bank refused to advance funds as a result of it? Would she be entitled to renage and get return of the deposit?
 
j26 said:
Would she be entitled to renage and get return of the deposit?
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My guess is no, unless the contract is subject to satisfactory surveyors report.

Any time I bought, my lender would not release funds until furnished with a satisfactory surveyors report.

For this reason, my solicitor always advised having the survey done before signing.
 
A lot of contracts these days are including a clause saying it is subject to the bank releasing the funds. Check with her solicitor, they will have a definitive answer.
 
Thanks.
The sellers solicitor has a problem inserting such a condition. I'm wondering whether a more limited clause allowing her to back out if there's a structural issue.

Otherwise a pre-contract survey would be prudent.
 
j26 said:
The sellers solicitor has a problem inserting such a condition.
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And the purchasers solicitor should have advised your niece not to accept this. Contract should have been subject to mortgage and subject to a clean survey.

Why did the bank get to see the survey? Did they require it? I once got an atrocious survey myself but I didn't disclose it to the bank or they would not have lent me the money.

Maybe your niece needs to try another bank, or get a reduced price to reflect the costs of repair, what is the actual problem.
 
The structural clause can also be quite common. I'm guessing they don't want to insert the clause about the funds not being released as its becoming common for people to have trouble during the draw down.

The bank requiring a survey is normally for older houses, or in at-risk areas. In either case you should be getting a survey before signing contracts. The vendor pushing you to sign before letting you do a survey is a big big warning sign in these cases.
 
j26 said:
The sellers solicitor has a problem inserting such a condition. I'm wondering whether a more limited clause allowing her to back out if there's a structural issue.
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And I'm wondering whether the vendor is aware of an existing issue that they don't want the buyer to become aware of until it's too late!
 
Leo said:
And I'm wondering whether the vendor is aware of an existing issue that they don't want the buyer to become aware of until it's too late!
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No vendor is going to point out structural or other problems. We live in a caveat emptor world.
 
I am confused. Has your niece signed a contract to buy the house or is she thinking about it? Is this a hypothetical problem or a real problem?

It would be very unusual to get a structural survey done after signing the contract.

The normal procedure is:
1) Get approval in principle from your lender
2) Agree a price with the seller subject to survey. Pay a refundable deposit of 5%
3) Get the property surveyed
4) If there is a serious problem, then renegotiate price or pull out . the deposit is refunded.
5) The seller will send contracts to the buyer's solicitor
6) The buyer's solicitor should not let the buyer sign until she is absolutely happy that finance is in place and title is ok.

The buyer has no commitment until she has signed the contracts.

Brendan
 
The house is half built, but has been left empty, unfinished for 5 years. Given that it's been empty and unheated, there's a higher chance of issues developing. Also there's no Homebond type guarantee.
It's a NAMA inspired sale in an unfinished development. It's at pre-contract stage, and my nieces solicitor requested a clause in the contract making it subject to mortgage drawdown. The vendor is refusing, so my question is essentially whether my niece would be able to get return of the deposit if a serious issue emerged and the bank refused to advance funds.

The answer seems to be no from the answers above so it seems be prudent to either ensure such a clause were inserted in the contract, or do a survey before contracts are signed.
 
I have set out the procedure.

After you have agreed the price, but before you sign contracts, get a structural survey done.

Your solicitor will not let her sign contracts unless she is confident that your niece can complete the sale.

Brendan
 
And also need to make sure the survey is backed up by personal indemnity insurance.
 
I would not dream of signing a contract and handing over a deposit for the house you describe without a survey. Even with a get-out clause.

Why sign a contract subject to survey and risk having to go through the legal rigmarole of getting out of the contract.

In the last 20 years, I have bought 2 houses which needed renovation work, In both cases, I had an offer accepted on a house, did a survey and walked away and found another house. I do not consider that the money was wasted, In both cases, it was the best money I spent during the house buying procedure.
 
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