House contracts, seller insisting we remove loan approval clause

Stressedms

Hi,
I am really hoping someone can advise or relay how they handled a similar situation. We went sale agreed on a house in early February and have been chasing the sellers solicitor since to respond to contract queries. Recently they are saying they are insisting we remove the standard clause from the contract 'subject to loan approval'. Yesterday they said that we have until close today to sign unconditional contracts and the clause stays in otherwise they go back on the market!

Our solicitor is recommending the clause stays in as it's recommended by the law society and protects the buyer. If for some reason after contracts are signed the bank doesn't issue the loan the buyer is protected but if the clause is removed the buyer runs the risk if anything went wrong with the loan of having to pay for the house and could be sued if they are unable to do so. Obviously we don't want to run this risk as we are not in a position to pay that sum without a loan and would have to declare bankruptcy. Our mortgage is in place and all looks on track for approval.

we are in a position to sign today but are concerned that signing an unconditional contract with this clause that protects us removed would put us at risk if the contracts were to throw anything up for the bank that would prevent the sale. They have no move in date stated and our solicitor thinks they want to push that out a few months for the buyer to buy and move into a new house. Our main concern now is whether it is safe or not to remove that clause.

Has anyone signed unconditional contracts with the loan approval clause removed? Has anyone fought back on a situation like this?

ted1

I wouldn't sign it without the clause .

They may know if a reason why the bank wouldn't release funds. Have you got a good survey done , have you checked the land register? Are there any extensions?

Sunny Dayz

Gosh you would really be leaving yourself wide open if that clause was removed. At least your solicitor has his head screwed on saying it shouldn't be removed. Stick to your guns. The clause should not be removed.


We used the fact that we needed a mortgage to push along the purchase of our house as the seller's (receiver) solicitor really liked to drag their feet. We told a little white lie about the mortgage approval running out soon (we still had a bit of time), that our max approval was for the purch price (we did have more capacity for borrowings) and if the approval ran out there was a good chance we wouldn't get the same approval again and would not be able to buy the house.


Keep the clause in and use the fact you are mortgage dependent to push them along with the sale.

KCross

Stressedms wrote: »

Hi,
Recently they are saying they are insisting we remove the standard clause from the contract 'subject to loan approval'. Yesterday they said that we have until close today to sign unconditional contracts and the clause stays in otherwise they go back on the market!

<snip>
Our mortgage is in place and all looks on track for approval.

<snip>

Based on what you have said it looks like you have already satisfied the condition of the clause?


I can understand they wanting to remove the clause if you have no approval from your bank as it would be wasting the sellers time but if you have approval from the bank just give them evidence of it.

I wouldnt remove the clause but I would go back to them with a letter from your bank showing you have approval.

If they still insist on removing it I'd be inclined to go elsewhere.

partyguinness

Listen to your solicitor. Do not remove the clause, it is there for your protection and you must do what's best for you- not the seller.

If you signed it without the clause and the MO was withdrawn (no matter how unlikely) and you cannot complete- the seller will:

a. Charge interest
b. Pocket the deposit and
c. Reserve his right to you sue for damages.

By the sounds of it, you would not get much sympathy from the seller if they are being this unreasonable now.

Stick to your guns- the seller is bluffing.

Rew

I had this discussion with my solicitor when the purchaser asked for it. We did agree it it eventually but it exposes me the seller to the risk that that my purchaser hasn't organised their mortgage to the point that they are confident in drawdown. Right now I stand to lose a couple of thousand if they don't get their mortgage and they would walk away with no penalty.

He said if we were buying a property and were relying on our sale completing he wouldn't let us sign contracts on the new property as the risk is too great. We aren't buying on so there is no issue. Sounds like your vendor may need an unconditional contract so that they can secure the purchase of the property they are moving to.

The explanation give to me on that clause was that it started being used in late 2008 the banks were resending a valuer out last minute who was saying the property was no longer worth the agreed price and pulling the mortgage.