Posted 13 November 2021
Buying first house: Long gap between exchange and completion, am I right to be worried?
Long story short, we are first time buyers the house we are buying, the sellers of that house are purchasing a new build. The new build company are insisting on a fast exchange, we have managed to hold them off for a few months but now there is nothing holding anything back so we will likely exchange next week. The completion will not be until the end of January.
2 questions if anyone has any advice.
1st our mortgage offer is valid until completion so won’t expire, what are the risks of it being retracted. We have had and will have no financial changes at all, jobs very secure etc. Is there a real risk?
2nd anyone know of any insurance companies who will insure for this long gap, most companies stipulate you cannot be out of the property for more than 30 days. I I also expect most ‘normal’ insurance is not actually suitable for between exchange and completion.
Any help/advice will be much appreciated.
2 questions if anyone has any advice.
1st our mortgage offer is valid until completion so won’t expire, what are the risks of it being retracted. We have had and will have no financial changes at all, jobs very secure etc. Is there a real risk?
2nd anyone know of any insurance companies who will insure for this long gap, most companies stipulate you cannot be out of the property for more than 30 days. I I also expect most ‘normal’ insurance is not actually suitable for between exchange and completion.
Any help/advice will be much appreciated.
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sorted byTell them this is unacceptable and unless you exchange and complete within a short time frame, usually a week, then you will withdraw your offer and search for new property as you wanted to be in by Christmas.
Or tell them that you will be reducing your offer by £2000 to compensate for the fact they are delaying you moving in by two months.
Some people just take the mick, you are in control, I would not accept that delay and I’ve bought loads of property.
Incorrect, insurance is required from exchange as that is when you legally agree to complete a purchase at a later date and as such, the mortgage company has an interest in the property and, even if the place burns down, you will still have to buy it. Sellers insurance normally ceases at exchange too.
Op needs to have insurance in place ready to activate on the exchange day.
The gap between exchange and completion is only meant to be a few days for the paperwork and money to be transferred. It used to be a couple of weeks due to bank processes and Royal Mail, nowadays there's no real reason why it can't always be same day although it is common to still take a week. My recent purchase was same day.
I'm with others though, why are they putting this on to you? If they're having to deal with the fast exchange due to the new build, then that's their problem. Their stuff in storage, live in a hotel for a while. They really cannot afford for you to drop out now, so you can demand pretty much anything you want.
At this point your solicitor will have the monies (to my understanding) in situ from the mortgage company and hold till completion (i.e. already agreed to continue from the mortgage company keeping your offer active and in progress).
Insurance, your solicitors needs to see that you have this for the mortgage conditions, but until completion is not formally your responsibility. Completion requires handover in state detailed through the solicitors and seller not doing so would be liable. Really should be talking to your solicitor here as they are best advising and what you are paying them for.
On properties I had empty and have keys (you will not till completion) my insurance company has insisted on periodic inspection to keep the property within terms (came useful with a tenant stuck in hong kong with covid restrictions) although do not see applicable for your example. Some insurance firms also have longer periods than 30 days too. (edited)
What has the solicitor said? They'll have more experience on this approach as it's very specific to new build purchases (of your seller).
I'd personally say a flat "no" - complete in 2 weeks or don't exchange.
If you are prepared to wait though, I'd be reducing offer by at least a couple of grand.
As mentioned above, if they are serious about moving they will move short term to a hotel and use storage, or agree to your terms within reason.
Learn something new every day (never had exchange the length the Op is looking at)
@OP In that case could be worth asking the insurers but are the term is unoccupied whilst it is occupied but with the previous owners making it still within the terms? (edited)
It’s normally a week or two.
The basics are, must be visited once a week, was 135 miles from where I was living.
Got my neighbour to go in once a week and txt all is ok etc.
And heating must be set at 10 degrees to stop pipes bursting.
I used quote line direct.
the mortgage money would be promised before the exchange, so if your solicitor can exchange this early then the bank will have agreed to the long wait. during the pandemic last year, the banks wanted exchange and completion to be on the same day as they were concerned something bad would happen to the buyer and they would still have to stump up the mortgage money for completion, but i think that fear has passed and the banks are back to their old ways again, which is good as the sooner this "crisis mentality" is over, the better for society.
the building insurance requirement of non occupation for less than 30 days is to do with the building being left empty. if the owners are still living there then it will be fine.
you have been asked for a wait of over 2 months, which is quite long but it depends on how much you want the property. there isn't any actual disadvantage to you as such, except inconvenience. but you could chance a request for reduction in price to accomodate this delay.
Was just about to add something very similar. I would add that the insurance issue is known to insurers and doesn't phase them at all. Most will cover your buyers for buildings cover after exchange. Therefore, any contents cover you have will still be valid. You will need to buy buildings cover for the new property from date of exchange. The house isn't actually paid for until completion day, so you are not inconvenienced much at all really. You could perhaps reasonably ask for a few weeks buildings insurance costs but I'd cover it to keep my sellers sweet. The average purchase time is 22 weeks at the moment, due to covid and stamp duty holiday backlog, so completing by January is actually a bit quick. Ask for your reduction by all means but be prepared for a flat "no".
Thanks for this. We actually got the offer accepted back in June. They wanted to exchange within 28 days! Luckily the process was long and we are only now in a position to exchange.
Yes this is exactly the reason for the date. It would have been 6 months between exchange and completion if they had it their way. We have no more wiggle room, I have been told if we don’t exchange next week then the new build company will offer the sellers part exchange. The sellers are unlikely to accept this as they only let us have 3k off asking price. So at that point they will lose their new house and then likely take there house of the market.
The issue is, if the mortgage is retracted for any reason. The bank can still do this between exchange and completion.
They are refusing to do a spit completion and move out. The mortgage money does not get requested until shortly before completion as the solicitor cannot hold onto it for so long, apparently it makes them a bank. We push any harder and we lose the house, this has been 5 months in the making so far and it’s the only house we have liked for 7+ months of looking. (edited)
you seemed to have not grasp this, which i had explained earlier. (edited)
It can be withdrawn after exchange…onlinemortgageadvisor.co.uk/mor…wn/
but it is very unlikely as stated here. it would have to be something pretty drastic.
samconveyancing.co.uk/new…262
Thank you for this, I will have a read through!
to be honest, the difference between 2 weeks, which is the standard gap and 2 months 1 week is not a huge amount in terms of the probabillity of something going drastically wrong. you are effectively asking yourself, what is the chance of everything going wits up over 1 month and 3 weeks, which is the extra time that we are talking about here.
i would say that chance is pretty small. of course you could be hit by a lorry during that extra gap and be severely disabled and so you can't get the mortgage, you could be told you are going to be made redundant, etc but to be honest, if these things happen even after completion, you would still be in trouble with the bank anyway.
if your solicitor is happy with the gap then they would have already considered the possibility of things going wrong and if they tell you it is fine to go ahead, then they are not that worried.
the alternative, if the sellers will not budge, is to lose the property, which would be costly for you.
The solicitor is not not worried, if that makes sense. They are not particularly
happy with the long date but also see their is no other choice in this situation. She is a little concerned and has to tell us it’s a real possibility to cover herself. I would agree the chance is very small. I have contacted the lender directly so we will see what they come back with.
Exchanging and completing on the same day is worse than leaving a 2 month gap. It carries the risk the other party could pull out literally on the day you plan to move.
i have heard of people who had booked the van and emptied their house only to be told that it has gone wrong and exchange/completion has not happened and so everything has to be taken out of the van and back into the house. i would never want to be in this situation.
you have to agree a completion date when you exchange. in some rare instances you can exchange without a completion date, but this is rare.
so once exchanged there will be penalty imposed on the seller if they do not hand over the property on completion. it will be the sellers who will have to stay in a hotel if the new build doesn't complete as expected and not the OP.
Better be, do you know if it’s the same for a long stop date. I have been trying to find out but it seems you can’t hold the sellers responsible if you go past the long stop date, all you can do is freely walk away with your deposit.
not heard of long stop date so this is what google says. not the same as a completion date, which is fixed and can not be renegaded on. it seems to apply to new build because they don't have an exact estimate of when the property will complete due to the uncertainty of the project.
the sellers may have to agree to the long stop date as they are buying a new build that is not yet complete, but this doesn't mean you have to. i would only go ahead with a fixed completion date and the sellers will have to take on the risk of the long stop date themselves.
fosters-solicitors.co.uk/pro…ons