Are there danger to 6 to 8 weeks between exchange and completion?

42 replies
Found 29th Oct 2016
I am in the middle of selling a house and the buyer has asked for a long lead in to exchange and a long lead in after that to completion because of the christmas period. Is there any danger to having 8 weeks between exchange and completion for me as seller?

42 Comments

Just that completion will be drawn out further than that

Original Poster

nbgrobbo

Just that completion will be drawn out further than that



But that would be agreed at exchange?

If you don't exchange early there's no guarantee you have sold it at all. I think it's better to exchange sooner with agreed final date for completion.

Original Poster

developers

If you don't exchange early there's no guarantee you have sold it at all. … If you don't exchange early there's no guarantee you have sold it at all. I think it's better to exchange sooner with agreed final date for completion.



He has asked to exchange in 30 days when it could be done in 15 days so i have asked him to reduce the 30 days. He has asked to complete in 6 weeks after that so potentially i could be waiting for 8 weeks between exchange and completion.

During this time, what if the house get damaged, am i responsible for that, or what if there are leaks over christmas?

Are you part of a chain is the rest affected

Original Poster

ding

Are you part of a chain is the rest affected



There is no chain and the house is empty, which is why i am concerned about leaks and damage between the long period between exchange and completion.

Normally the purchaser insures from exchange but can be agreed differently. Solicitors will confirm liabilities, I don't understand how 6 weeks becomes 8 weeks after exchange although you may decide if it's exchanged on their risk it doesn't matter.

Original Poster

developers

Normally the purchaser insures from exchange but can be agreed … Normally the purchaser insures from exchange but can be agreed differently. Solicitors will confirm liabilities, I don't understand how 6 weeks becomes 8 weeks after exchange although you may decide if it's exchanged on their risk it doesn't matter.



If he agrees to push the exchange forward by two weeks then it will mean 8 weeks wait instead of 6 weeks. I may have certainty but have i increased the risk of me covering for damage and leaks? If the house was burnt down, do i have to rebuild it? I will have to make sure he takes on the risk as the time span is not normal.

Time frame may not be normal but there may be a reason for the timing. Try asking! He may be coinciding this with school holidays in kids starting different school, new job or even financial. Maybe money to complete is coming from a source that needs a months notice or something. Maybe inheritance not quite concluded. Could even be a term on his mortgage offer.

To exchange and complete in 8wks is good going and I work in legal sector.

Original Poster

debbiedturner

Time frame may not be normal but there may be a reason for the timing. … Time frame may not be normal but there may be a reason for the timing. Try asking! He may be coinciding this with school holidays in kids starting different school, new job or even financial. Maybe money to complete is coming from a source that needs a months notice or something. Maybe inheritance not quite concluded. Could even be a term on his mortgage offer.To exchange and complete in 8wks is good going and I work in legal sector.



He is getting a bridging loan so he doesnt want the house when he cant do anything with it as he plans to redevelop it. 8 weeks is the gap between exchange and completion, not from offer date to completion. I have googled the danger of long wait but cant see anything conclusive.

Get to exchange of contractsas fast as possible without any delays. But agree to a delayed completion. Once exchange has taken place and 10% paid if they pull out you keep the 10%.
I once had 4 months from exchange to completion.

Exchange is the key date.

mutley1

He has asked to exchange in 30 days when it could be done in 15 days so i … He has asked to exchange in 30 days when it could be done in 15 days so i have asked him to reduce the 30 days. He has asked to complete in 6 weeks after that so potentially i could be waiting for 8 weeks between exchange and completion.During this time, what if the house get damaged, am i responsible for that, or what if there are leaks over christmas?


Obviously you are responsible for your house until completion. oO

Possible issues include;

- extra insurance costs to cover those extra days

- if the house is empty more than 45 consecutive days usually you have to have specialist insurance or certain things won't be covered

- extra cost of heating the house so the pipes don't burst etc

- possibility of squatters if the house is empty for a long period of time

- if anything goes wrong it's your responsibility


My parents were selling a house in winter and they wanted to get to exchange and complete as soon as was possible as houses don't do well being empty in the cold weather and it is stressful worrying about keeping the house running & safe.

mutley1

He is getting a bridging loan so he doesnt want the house when he cant do … He is getting a bridging loan so he doesnt want the house when he cant do anything with it as he plans to redevelop it. 8 weeks is the gap between exchange and completion, not from offer date to completion. I have googled the danger of long wait but cant see anything conclusive.




If he's a developer he's just trying his luck to keep his costs down and his profits up.

You don't have to accept the long wait, and personally I wouldn't.

You have said before you had plenty of interest in the house etc, you don't have to accept his request as you can always go to the next offer who may be able to complete in a more reasonable time.

With winter coming, I'd want to complete ASAP.

Original Poster

qprfanbideford

Get to exchange of contractsas fast as possible without any delays. But … Get to exchange of contractsas fast as possible without any delays. But agree to a delayed completion. Once exchange has taken place and 10% paid if they pull out you keep the 10%. I once had 4 months from exchange to completion.Exchange is the key date.



I was thinking this so i have asked the agent to go back to him and ask that he shortens the 30 days before exchange but i wonder if this is a wise move as i may shoot myself in the foot playing house keeper for someone for longer.

Original Poster

sickly sweet

If he's a developer he's just trying his luck to keep his costs down and … If he's a developer he's just trying his luck to keep his costs down and his profits up. You don't have to accept the long wait, and personally I wouldn't.You have said before you had plenty of interest in the house etc, you don't have to accept his request as you can always go to the next offer who may be able to complete in a more reasonable time.With winter coming, I'd want to complete ASAP.



I think you are right, him trying his luck. I may call his bluff. I will need to ask my solicitors advise before accepting the long delay to completion.

I'm in the opposite situation to you. I'm the buyer and I am waiting on exchange of contracts and move date. No chain. Seller dragging their heels and seeming to take forever. We were hoping to be in for Christmas so that we can get necessary works done.

Their estate agents and solicitors are horrendous. We are constantly chasing them. Everything done our end within 10 days of offer accepted. They are Useless both our conveyancer and I leave message after message and they never return calls.

Think the estate agent has the hump because we didn't do with her mortgage advisors and solicitors so she didn't get her kick back.

Glad I didn't because they are hopeless. Their office is full of 16 year old apprentices who fail to pass on information follow up calls etc.

They also messed up the initial contract by having the wrong names on them and the wrong property and to top it off sent it to the wrong solicitors.

I am 100% sure our initial offer on the house was not even passed to the vendor.

Can't wait until it's all done.

Standard Conditions of Sale (google it) clearly state the property is at the risk of the buyer from the date of the contract. That is the date of exchange.

Unless there are extenuating circumstances I'd want to secure the sale snd complete as soon as possible. Better for you to get the money in your account and not have responsibility and expense of securing an empty house. Would you be liable for council tax ax well?

give some slack to the buyer at least he is being honest and told u his intentions u get some who keep delaying for various silly reason well the solicitors usually do this a friend of mine was buying a house and the delays took it from 6to 8 weeks to 14 odd weeks solicitors kept saying I need more information on such a such item willy nilly such as a mine entry over 200 meters away or slight issue with a door or window etc etc

At a simple level it relates to "cost" to you. i.e. prior to exchange of contracts, your buyer has a "free option" on whether or not to buy your house (putting aside any costs that they've already incurred).

As he's a developer, he may be angling for more time whilst he works with the local planning authority to secure planning/ building regs consent. If so, try to keep track of the progress (& ultimate success) via the local council website where they publish such consent approvals, so that once it's been agreed, you're in a stronger negotiating position, whereby he faces the possibility of losing the property, having secured the planning consent, which will prove attractive to other developers.

Other questions arise from your question such as (1) what were the terms of you accepting his offer? e.g. was it subject to exchange of contracts (& possibly completion also thereafter?) within a specific period of time from receipt of legal pack? (2) Have you had written evidence of his ability to fund the purchase? (3) Has his solicitor completed all the legal work?

As others have said, push back hard on the extended exchange period & look to agree a revised completion schedule, with daily rate penalties, whereby his purchase price obligation increases once the agreed completion date is passed, so that he has a hard, financial incentive to complete the transaction as agreed.

Original Poster

qprfanbideford

Get to exchange of contractsas fast as possible without any delays. But … Get to exchange of contractsas fast as possible without any delays. But agree to a delayed completion. Once exchange has taken place and 10% paid if they pull out you keep the 10%. I once had 4 months from exchange to completion.Exchange is the key date.



why did you have 4 months in between?

Original Poster

fearghalg

I'm in the opposite situation to you. I'm the buyer and I am waiting on … I'm in the opposite situation to you. I'm the buyer and I am waiting on exchange of contracts and move date. No chain. Seller dragging their heels and seeming to take forever. We were hoping to be in for Christmas so that we can get necessary works done. Their estate agents and solicitors are horrendous. We are constantly chasing them. Everything done our end within 10 days of offer accepted. They are Useless both our conveyancer and I leave message after message and they never return calls. Think the estate agent has the hump because we didn't do with her mortgage advisors and solicitors so she didn't get her kick back. Glad I didn't because they are hopeless. Their office is full of 16 year old apprentices who fail to pass on information follow up calls etc. They also messed up the initial contract by having the wrong names on them and the wrong property and to top it off sent it to the wrong solicitors. I am 100% sure our initial offer on the house was not even passed to the vendor. Can't wait until it's all done.



I was in the same position as a buyer on the last house that I purchased where the seller refused to do anything and I did wonder why he put the property up for sale when he can't be bothered to do anything to help sell his house. He took ages to do what he had to do then accuse us of being slow when it comes to our end.

He was a complete nightmare and complete nutter. We had to take him to court after the sale completed because he did not clear the garden of rubbish when we had that written into the sale contract.

Original Poster

castellano

At a simple level it relates to "cost" to you. i.e. prior to exchange of … At a simple level it relates to "cost" to you. i.e. prior to exchange of contracts, your buyer has a "free option" on whether or not to buy your house (putting aside any costs that they've already incurred). As he's a developer, he may be angling for more time whilst he works with the local planning authority to secure planning/ building regs consent. If so, try to keep track of the progress (& ultimate success) via the local council website where they publish such consent approvals, so that once it's been agreed, you're in a stronger negotiating position, whereby he faces the possibility of losing the property, having secured the planning consent, which will prove attractive to other developers.Other questions arise from your question such as (1) what were the terms of you accepting his offer? e.g. was it subject to exchange of contracts (& possibly completion also thereafter?) within a specific period of time from receipt of legal pack? (2) Have you had written evidence of his ability to fund the purchase? (3) Has his solicitor completed all the legal work?As others have said, push back hard on the extended exchange period & look to agree a revised completion schedule, with daily rate penalties, whereby his purchase price obligation increases once the agreed completion date is passed, so that he has a hard, financial incentive to complete the transaction as agreed.



I think it is more to do with the loan interest as bridging loans incur high rates of interest and he will be taking out £1.5m in bridging loans to buy and redevelop the property, if not more. At this sort of cost, interest payments become significant in the grand scheme of things as even two weeks of interest is a lot of money.

He hasn't applied for planning permission as he can't do that until he owns the property but he is drawing plans for the new build ready to submit to planning as soon as he gets the property. I think you may right that he is hoping to do this as soon as exchange has been done so it gives him a running ramp for the planning process.

All the legal papers are completed. He is waiting for a structural survey report next week so everything is technically ready for the end of this month.
Edited by: "mutley1" 30th Oct 2016

Whilst I'm not a planner, I believe that your purchaser can apply for planning consent prior to him becoming the owner of your property, subject to the giving of relevant notices to you as current owner etc.

If this is correct, then my comment about your negotiating position becoming stronger the nearer the planning process gets to a positive conclusion holds true.

I'd check this out (other HUKD members may be able to confirm) and if so, have a face-to-face meeting with him to deal with this matter.

Simply remind him that "you" also have "options" (unless you're in desperate need to sell) and whilst you want to be straight with him, you retain the opportunity to pursue interest from other parties, so it's in his interest to exchange & complete in the 28 days/4 weeks.

Original Poster

castellano

Whilst I'm not a planner, I believe that your purchaser can apply for … Whilst I'm not a planner, I believe that your purchaser can apply for planning consent prior to him becoming the owner of your property, subject to the giving of relevant notices to you as current owner etc.If this is correct, then my comment about your negotiating position becoming stronger the nearer the planning process gets to a positive conclusion holds true. I'd check this out (other HUKD members may be able to confirm) and if so, have a face-to-face meeting with him to deal with this matter. Simply remind him that "you" also have "options" (unless you're in desperate need to sell) and whilst you want to be straight with him, you retain the opportunity to pursue interest from other parties, so it's in his interest to exchange & complete in the 28 days/4 weeks.



that is true. i understand that you can apply for planning permission for a property you do not own but you have to inform the owner. i have not received any notice from him that he is applying for planning permission so i assume that he has not yet done this.

he tried to hide the fact that he was redeveloping the property when he made the purchase offer as he didn't want me to know he was a developer, thereby asking for more money. i knew he was going to redevelop the property but he may not want anyone to know what his plans are until he has exchanged in case he ends up in a bidding war with other developers or he gives me his ideas and i decide to do the redevelopment myself as he knows i have the money to do this.

Quite a number of alarm bells should be ringing.

If you're happy to stick with him (noting your wish to expedite the sale process or not allow the purchaser to prolong it), don't agree to any timeframe, let him do all his planning work to completion & then withdraw from the transaction.

Then:

(1) Get your agent to remarket the property (now with the benefit of planning consent) but do so in an "angry & agitated" state (see below as to why you should behave in this way)

(2) Instruct your solicitor to tell his oppo that the client (you) has taken this action due to the failure of his client to perform as per the original offer & acceptance.

Then wait for the urgent re-engagement & above all else remain calm. Make sure he's treated as a new purchaser.

One final point, do not under any circumstances tell your agent anything (& I mean anything) that you would not want disclosed to the purchaser.

e.g. that you'd still prefer to stick with the purchaser but want to bring him to the negotiating table to conclude matters.

Always assume that anything you tell your agent (particularly with a "development play") will be disclosed to the developer/purchaser, as the agent wants to retain a relationship with them for future work such as the sale instruction for subsequent newly refurbished residential units arising from your property.

Original Poster

castellano

Quite a number of alarm bells should be ringing. If you're happy to stick … Quite a number of alarm bells should be ringing. If you're happy to stick with him (noting your wish to expedite the sale process or not allow the purchaser to prolong it), don't agree to any timeframe, let him do all his planning work to completion & then withdraw from the transaction. Then:(1) Get your agent to remarket the property (now with the benefit of planning consent) but do so in an "angry & agitated" state (see below as to why you should behave in this way) (2) Instruct your solicitor to tell his oppo that the client (you) has taken this action due to the failure of his client to perform as per the original offer & acceptance. Then wait for the urgent re-engagement & above all else remain calm. Make sure he's treated as a new purchaser. One final point, do not under any circumstances tell your agent anything (& I mean anything) that you would not want disclosed to the purchaser. e.g. that you'd still prefer to stick with the purchaser but want to bring him to the negotiating table to conclude matters. Always assume that anything you tell your agent (particularly with a "development play") will be disclosed to the developer/purchaser, as the agent wants to retain a relationship with them for future work such as the sale instruction for subsequent newly refurbished residential units arising from your property.



With planning consent, the property would be worth a lot more, which is why it may be not worthwhile for him to apply for this if he is not assured of the property. Planning permission can take up to 6 months to get and i don't want to wait that long. But of course, if he did get planning permission before exchange, which is unlikely as he says 30 days, so end of this month, then i may renegotiate the price as i may put it out to tender with other developers.

This is what he wont want to happen. The property is in central london where property developers are always sniffing about and the property is unique, you wont get this sort of property coming up for development too often.

Good point about the agent, they may not be working for me as he will be their client as well. Haven't thought of that.

In the event that you can't get the timeframe agreed to your satisfaction:

(1) Consider an arrangement with the purchaser to share the "overage" in the enhanced vacant possession value (i.e. with the benefit of planning consent), so that you get some financial upside from allowing the purchaser time to pursue his planning application.

(a) Agree a "pre-planning consent" value for the property (this may simply be the existing sale price) but shouldn't preclude a re-negotiation of the current sale price.

(b) Jointly obtain with the purchaser at least 3 marketing opinions/values of the property in its "enhanced" state (i.e. on the basis that the purchaser obtains planning consent)

(c) Agree with the purchaser a "sharing" of the increased "vacant possession" value of the property. e.g. you receive 10%

NB - do not agree to receive a percentage of the "end value", as the sale proceeds (from the sale of the individual residential units) will be legally charged to the purchasers lender to first repay the loan secured on the property & any "surplus" sale proceeds, over & above those due to the lender to repay the loan, may take some time to come through.

Also, by getting a share of the vacant possession value, you'll benefit more quickly and especially if your purchaser "flips" the property to another party once he's obtained planning consent.

(d) Purchaser seeks planning consent for his residential conversion of your property.

(e) Purchaser obtains planning consent.

(f) Complete sale with enhanced sale proceeds.

Original Poster

castellano

In the event that you can't get the timeframe agreed to your … In the event that you can't get the timeframe agreed to your satisfaction:(1) Consider an arrangement with the purchaser to share the "overage" in the enhanced vacant possession value (i.e. with the benefit of planning consent), so that you get some financial upside from allowing the purchaser time to pursue his planning application. (a) Agree a "pre-planning consent" value for the property (this may simply be the existing sale price) but shouldn't preclude a re-negotiation of the current sale price. (b) Jointly obtain with the purchaser at least 3 marketing opinions/values of the property in its "enhanced" state (i.e. on the basis that the purchaser obtains planning consent) (c) Agree with the purchaser a "sharing" of the increased "vacant possession" value of the property. e.g. you receive 10%NB - do not agree to receive a percentage of the "end value", as the sale proceeds (from the sale of the individual residential units) will be legally charged to the purchasers lender to first repay the loan secured on the property & any "surplus" sale proceeds, over & above those due to the lender to repay the loan, may take some time to come through. Also, by getting a share of the vacant possession value, you'll benefit more quickly and especially if your purchaser "flips" the property to another party once he's obtained planning consent. (d) Purchaser seeks planning consent for his residential conversion of your property.(e) Purchaser obtains planning consent. (f) Complete sale with enhanced sale proceeds.



Lol. You got me freaking out that i am losing out. So i went and searched for planning application for my property, wondering if he has sneakily applied for planning permission without telling me. Nothing came up. Phew....

I am happy to sell for the agreed price but it gives me options to keep the house if he starts any funny business, like re-negotiating the price. He knows the area well, so i reckon he already has been in discussion with the planning department for approval unofficially. You wouldnt want to buy a property for this price on a wing and a prayer that you may get permission.

You may well be leaving a lot of value on the table, however if your priority is jam now rather than the possibility of more jam tomorrow, then that (leaving value for the purchaser) could be one of the trade-offs you have to make & ultimately live with.

Good luck in getting the sale completed but suspect it won't be plain sailing with such a purchaser.

Original Poster

castellano

You may well be leaving a lot of value on the table, however if your … You may well be leaving a lot of value on the table, however if your priority is jam now rather than the possibility of more jam tomorrow, then that (leaving value for the purchaser) could be one of the trade-offs you have to make & ultimately live with. Good luck in getting the sale completed but suspect it won't be plain sailing with such a purchaser.



I agree. I give it a 50 / 50 chance this deal will fall through.

Ask for a £10k holding deposit that you solicitor would hold and payout if the deal fails through on their side.

Original Poster

markvirgo

Ask for a £10k holding deposit that you solicitor would hold and payout … Ask for a £10k holding deposit that you solicitor would hold and payout if the deal fails through on their side.



Never heard of this before on sale and purchase. Is it common?

This is pretty much above me, but from what I can gather you're being quite easy going with the buyer allowing him extra time etc when you could go ahead and either develop & sell it yourself, or sell it to another buyer as-is and probably make more than this guy is offering? If that's true and you haven't signed any contracts for selling, why not just get a better payout by doing option 2 or 3? Maybe I misunderstood, who knows!

mutley1

Never heard of this before on sale and purchase. Is it common?



My brother did it when he moved due to the purchaser taken too long. Speak to your solicitor to arrange, It can either be the actual cash transfer or a legal agreement which can then be upheld if they pull out of the deal.

Original Poster

markvirgo

My brother did it when he moved due to the purchaser taken too long. … My brother did it when he moved due to the purchaser taken too long. Speak to your solicitor to arrange, It can either be the actual cash transfer or a legal agreement which can then be upheld if they pull out of the deal.



That is interesting. I know all about holding deposit for rentals but i have never heard of a holding deposit for sale of a property. I will certainly think about that. Thanks.

Original Poster

PenguinsForAll

This is pretty much above me, but from what I can gather you're being … This is pretty much above me, but from what I can gather you're being quite easy going with the buyer allowing him extra time etc when you could go ahead and either develop & sell it yourself, or sell it to another buyer as-is and probably make more than this guy is offering? If that's true and you haven't signed any contracts for selling, why not just get a better payout by doing option 2 or 3? Maybe I misunderstood, who knows!



He came in as the highest offer but the condition was that it would be taken off the market so if i remarket, it means i will not sell to him and take my chances with remarketing. He knows this will mean that i wont be able to complete any faster than what he proposes so he has got the upper hand with the timing.

I cant work him out as he seems serious with the purchase as he has spent a lot of money paying for his solicitors as all the legal papers are completed and he has paid for architects and structural engineers so he has already spent a fair amount. This makes me think he must be serious about the purchase else he wouldnt have spent so much already.

However, things are moving very slow and my patience is wearing thin when he is asking for long leads. I am at the point where i may start throwing me toys out of me pram as i feel i am being messed around. My OH seems to think that it is not unreasonable for him to ask for a long lead over christmas.

Eesh, I feel for you.

Hope it gets sorted sooner than you think, moving is a real stressful situation

Suggest you do not throw any toys out of any pram & in fact do the complete opposite.

Stay quite calm & take whatever action (e.g. changing course) in a manner that suggests to your purchaser that this is exactly how you intended things to go & not as a knee-jerk reaction to your frustration as to the purchasers behaviour, however frustrating it might be.

If you give him the slightest hint that you're not entirely serious about what you're (now) doing (i.e. changing marketing strategy), then he'll likely use it to his advantage & believe that he's the only game in town.

He may well have submitted the highest bid but the key here is not necessarily the amount but whether your bidder/purchaser has not only the funds to complete the transaction but the "intent" to do so.

On a net present value basis, every day that elapses without a positive conclusion to the sale, erodes the value of his bid.

e.g. a highest bid of £1m that isn't delivered upon for 6 months, is possibly worth less than £980,000 delivered in 2 months (I've not done the maths, this is just an example).

Moreover, a highest bid is only ultimately the "best bid" if it's actually completed as agreed.

Try to keep calm & focused & as I said earlier, use the "indiscretion" of your agent, to sow the seeds of "disinformation" to the purchaser, to your advantage.

Start "acting" & "put on a show" for the benefit of the purchaser & the agent, to better further your cause. Good luck.
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