Are there any reasons why a house purchase won’t Complete after Exchange of contracts?

by Readers Question

11:05 AM, 14th October 2014
About 4 years ago

Are there any reasons why a house purchase won’t Complete after Exchange of contracts?

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Are there any reasons why a house purchase won’t Complete after Exchange of contracts?

Once we have exchanged contracts are there any feasible reasons why we won’t then complete the sale of our house?

When sold I intend to move in to rented accommodation. I have found a place I like but can’t commit until the sale of my house is confirmed. Therefore what I am really asking is, is it safe to sign a 6 month assured short term tenancy on exchange of contracts or do I need to wait until completion?

Many thanks

Onslowcontract



Comments

Neil Patterson

11:18 AM, 14th October 2014
About 4 years ago

Hi Onslow

Exchange of contracts means that the sale completion is promised/contracted to take place on a set date. The purchaser’s solicitor will not allow them to exchange without knowing all the monies are in place.

In my experience of thousands of completions it is a very rare occurrence that completion fails after exchange. However, it is possible that the purchasers circumstances can change and the lender withdraws its offer or something unexpected happens that prevents completion.

In this event your solicitor will sue for your costs, but there is no guarantee the purchaser can pay.

As I said this is rare and I would not want to unduly concern anyone in your circumstances especially as the solicitor will normally hold the deposit funds in their client account.

The longer the time period between exchange and completion theoretically increases risk, but do you have a reason why you may be concerned in this instance?

Mark Alexander

12:16 PM, 14th October 2014
About 4 years ago

Reply to the comment left by "Neil Patterson" at "14/10/2014 - 11:18":

I concur.
.

Ian Ringrose

16:03 PM, 14th October 2014
About 4 years ago

Depth of a party to the transaction is a common reason.

Mortgage lenders are now pulling mortgage offers even minutes before completions, as they know they can so delay some of the checks until after the offer is made.

However there is also the risk you get run over by a bus on the way to pick up the keys to your new property….

Onslow Clough

17:56 PM, 14th October 2014
About 4 years ago

Reply to the comment left by "Neil Patterson" at "14/10/2014 - 11:18":

Thanks for that Neil, that's reassuring, my concern is that as i am going in to rented accommodation i will need to sign a 6 month contract. This causes a bit of a catch22, I can't complete on the house until i have a rental agreement in place and I can't commit to rental contract until i know I am selling the house. The best solution is to exchange contracts knowing the sale will go through and then sign the rental agreement. This plan would only fail if for some reason completion didn't take place.. I would then be left with a house and a rented property.

Neil Patterson

21:02 PM, 14th October 2014
About 4 years ago

Hi Onslow,

I would recommend as short a time difference between exchange and completion and it would be very unlikely that you have a problem 🙂

Onslow Clough

22:11 PM, 14th October 2014
About 4 years ago

Reply to the comment left by "Neil Patterson" at "14/10/2014 - 21:02":

Thanks Neil. One of the benefits of this is that after exchange, I can sign the AST and for a short period have 2 houses. This means i can stagger the moving in process over a few days which will be a lot less stressful.

kay ola

19:52 PM, 2nd November 2015
About 3 years ago

Question please. A seller has indicated withdrawal from a sale after exchange of contract in September and a 31 December completion date. Deposit paid 40% of £128K agreed price. How can buyer protect himself and complete.

Neil Patterson

20:03 PM, 2nd November 2015
About 3 years ago

Ah I have only personally seen a purchaser pull out.

Speak to your solicitor as you need to sue for costs. The deposit will be in the solicitors client account so that should be safe at least.


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