ChatterBank1 min ago
If there's a problem with completion?
I am buying a new build flat in a small block and am supposed to exchange contracts tomorrow. By all accounts I am still the only one who has bought. I am nervous that, for whatever reason, the builder may decide to pull out and where would that leave me financially? He has already reduced the sale price of the flats quite dramatically and as we are not setting a date for completion he could quite easily take his time completing the block. We couldn't complete anyway without the NHBC certificate. My solicitor has told me my deposit would be secure as it would be lodged with the builder's solicitors but I don't fancy the prospect of hanging around for months without an end in sight. Any advice or comment would be appreciated. Many thanks.
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The correct person to advise you is your solicitor - that's what you are paying him for.
One way that you might wish to put to your solicitor is that you set a time condition in the contract at exchange such that, if the builder fails to effect practical completion of the whole block within a certain time (say 6 weeks), you have the right to withdraw from the sale. If that sounds attractive to you, I would hold the line at that clause, rather than proposing putting a clause in about reducing your offer price if he doesn't achieve practical completion. You could always decide to make such an offer at the end of the six week window (when you would have the right to withdraw from the whole sale anyway).
One way that you might wish to put to your solicitor is that you set a time condition in the contract at exchange such that, if the builder fails to effect practical completion of the whole block within a certain time (say 6 weeks), you have the right to withdraw from the sale. If that sounds attractive to you, I would hold the line at that clause, rather than proposing putting a clause in about reducing your offer price if he doesn't achieve practical completion. You could always decide to make such an offer at the end of the six week window (when you would have the right to withdraw from the whole sale anyway).
It's what we call a longstop date, that if the property isn't ready or other conditions (eg at least a certain amount of the block sold) by x date then you can withdraw from the sale and get your deposit back in full.
Speak to your solicitor as to how the deposit is to be held (there are different ways eg as agent and stakeholder) to protect your deposit should the worst happen so your deposit is immediately available for return (see if you can get interest on it too). Deposits are often handed over to the developer after exchange so make sure it is safe eg stays with the developer's solciitors on their deposit account.
Have you got a mortgage offer as yet? If not then I'd look into this and check with your lender as it is getting much harder to get a decent mortgage on new build properties, especially so at the moment.
I'd also ask for the contract to be conditional upon having an appropriate mortgage offer (ie that it is suitable for you, not any old mortgage offer).
Also give NHBC a ring and ask them if they can explain the warrantly to you and what would need to be done (or, more importantly, not done - including communal areas and facilitie, entrances etc...) in order for them to sign the property off so you have idea of what you may be contracting yourself to move into!
http://www.nhbc.co.uk/
Speak to your solicitor as to how the deposit is to be held (there are different ways eg as agent and stakeholder) to protect your deposit should the worst happen so your deposit is immediately available for return (see if you can get interest on it too). Deposits are often handed over to the developer after exchange so make sure it is safe eg stays with the developer's solciitors on their deposit account.
Have you got a mortgage offer as yet? If not then I'd look into this and check with your lender as it is getting much harder to get a decent mortgage on new build properties, especially so at the moment.
I'd also ask for the contract to be conditional upon having an appropriate mortgage offer (ie that it is suitable for you, not any old mortgage offer).
Also give NHBC a ring and ask them if they can explain the warrantly to you and what would need to be done (or, more importantly, not done - including communal areas and facilitie, entrances etc...) in order for them to sign the property off so you have idea of what you may be contracting yourself to move into!
http://www.nhbc.co.uk/
buildersmate and Jenna1978, many thanks for your replies. I will follow your advice regarding the time condition at exchange. I have a good mortgage offer in place, as I am only borrowing a small amount over 8 years but will certainly go down the NHBC route too. Again, if you log back in on this, thanks.
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