Un­til you’ve ex­changed con­tracts, there’s no le­gal re­course

Yorkshire Post - Property - - PROPERTY - John Rob­son

Q: I own a flat in north Leeds which is in neg­a­tive eq­uity. I have agreed to buy a new prop­erty from a well-known York­shire-based de­vel­oper. As part of the deal the de­vel­oper agreed to pro­vide me with a sub­stan­tial al­lowance to­wards the neg­a­tive eq­uity un­der what they call their “star mover” scheme.

Un­der this scheme they ap­pointed the sell­ing agents whom, some weeks ago, se­cured a cash buyer for my flat.

The con­veyanc­ing process pro­gressed to the stage where I had signed con­tracts and agreed a com­ple­tion date when the buyer of my flat with­drew as he no longer had the cash avail­able.

I have ap­proached the ap­pointed sell­ing agents who seem dis­in­ter­ested. They state the buyer pro­duced proof of avail­able cash but they have not re­tained any hard copy record of this on their file.

I have in­formed the de­vel­op­ers that my high per­cent­age mort­gage of­fer ex­pires in a few weeks’ time. I was then in­formed they would con­sider a part ex­change of my flat, re­mov­ing the need to se­cure a new buyer. How­ever, to add in­sult to in­jury, the de­vel­oper’s con­veyancers con­tacted my con­veyancer to say their clients do not of­fer part ex­change on flats.

As a re­sult of all this I have in­curred sub­stan­tial le­gal and sur­vey costs, or­dered new fur­ni­ture for my pro­posed new home, aside from the stress and time away from work cop­ing with the process. I ap­pre­ci­ate there is no le­gal com­mit­ment of the agreed deal un­til an ex­change of con­tracts but I do feel blame­less for my present sit­u­a­tion.

Do I have any re­course? A: It is cor­rect, no le­gal agree­ment is achieved un­til con­tracts are ex­changed. Thus you have no re­course against ei­ther the for­mer buyer who re­tracted due to a change in fi­nan­cial cir­cum­stances or the

I have in­curred sub­stan­tial le­gal and sur­vey costs and or­dered new fur­ni­ture.

de­vel­oper who would still pro­ceed with the deal should you be able to re-sell your flat.

This, I know, leaves you with the fi­nan­cial out­lay of le­gal and other pro­fes­sional fees for no re­turn.

The fact the de­vel­op­ers al­most of­fered a part ex­change is a tact­less of­fer which, in view of their pol­icy, should never have been sug­gested in the first place.

Turn­ing to the sell­ing agent’s po­si­tion, from your ques­tion it seems to be the case they were ap­pointed by the de­vel­op­ers rather than your­self.

As such you will need to es­tab­lish the terms of their con­tract and who it is with – the de­vel­oper or you. If the agents are un­able to pro­vide hard copy ev­i­dence con­firm­ing they car­ried out the re­quired fi­nan­cial checks and re­ceived the proof of fi­nance then they may be neg­li­gent. If a buyer says he has the cash then the client of the sell­ing agent is en­ti­tled to know this state­ment has been ver­i­fied. How­ever, the agents would only be ac­count­able to their client who, in this case, ap­pears to be the de­vel­op­ers who ap­pointed them.

Sadly, you should not have or­dered fur­ni­ture un­til the ex­change of con­tracts had been achieved.

The best course of ac­tion is to pos­i­tively chal­lenge the sell­ing agents to vig­or­ously mar­ket your prop­erty, get the de­vel­op­ers be­hind you in this and to ap­proach your mort­gage lender for an ex­ten­sion of time to com­plete your loan.

It does seem that fi­nan­cially the de­vel­op­ers are will­ing to be flex­i­ble to achieve the deal.

Clearly they stand to ben­e­fit from the sale of the new house to you and are will­ing to pro­vide fi­nan­cial in­cen­tives to achieve this.

John Rob­son is Res­i­den­tial Con­veyanc­ing Man­ager at Ford & War­ren So­lic­i­tors in Leeds.

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