Time between exchange and completion?

by Readers Question

13:49 PM, 11th May 2016
About 3 years ago

Time between exchange and completion?

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Time between exchange and completion?

My grandparents are downsizing to a flat and are able to purchase a new property without selling their current family home and without needing a mortgage (they have also paid off the mortgage on their house). saving

My husband and I would like to buy their house and they are happy to sell it to us but things have happened faster than expected and my husband and I don’t yet have enough for a deposit. Someone mentioned to me that you can exchange, but delay completion whilst getting funds together, but it could take us around 2 years to raise enough money.

Could we delay completion for this long (with agreement from my Grandparents of course)? In the meantime would we be able to move in and pay them a fixed amount per month either to be considered as rent or as a contribution towards the deposit.

Does anyone know if this is workable?

Many thanks

Jen



Comments

Neil Patterson

13:54 PM, 11th May 2016
About 3 years ago

Hi Jen,

Yes technically you can have a long exchange to completion date, but these are put into place normally on off plan development because the seller needs to trust that the purchaser will buy and not back out, or hold you to the contract.

With a purchase between family I am not sure I see the need to do this if everyone is all agreed. Are your Grandparents ever likely to try and sue you for non-completion ?

However with the second part of your question and guessing there may be other family involved I think you may need to take advice from a family solicitor and consider the wills and or doing them if you haven't already.

Ross McColl

14:06 PM, 11th May 2016
About 3 years ago

You could exchange with completion set on or before whatever date you agree to. This gives you the flexibility to complete earlier if necessary, although as Neil pointed out I don't really see why you cannot simply rent the property at a nominal sum and then purchase it when you are ready. Why do you want to start the transaction now, is it in a bid to try and avoid the extra 3% Stamp Duty or is there something I am missing?

Andrew Tokely

9:49 AM, 13th May 2016
About 3 years ago

Do not forget that they will need to pay the additional 3% stamp duty as they would now own 2 properties. This extra can be claimed back if they sell/dispose the first property within a specified period (18 months).

To me it sounds either a EDC or a potential for a Lease Option. You need to make sure the right paperwork is in place if in the worst case something happens to your grandparents and you end in discussions and dispusts with other potential heirs (their sons and daughters etc.). Sounds morbid I know but you just never know.

Nick Pope

13:30 PM, 14th May 2016
About 3 years ago

Completions can be delayed for as long as you like. Be aware however that Stamp Duty may be payable anyway as the Government wants its share of the boodle! They will have to pay the 3% surcharge as they will own 2 properties

Bear in mind that as these are grandparents they are presumable elderly - solicitors may wish to consider what happens if one or both of them should pop off in the interim.

Have you thought of getting a mortgage based on the purchase price agreed, with your grandparents gifting the deposit or you defer payment of part of the price and pay it back on a monthly basis over the three years (but this may be taxable as rent).

Maybe a joint account between you and the grandparents for saving the deposit over the period, payable as a lump sum at the end.

I'm sure some smart lawyer would be able to sort it out.


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