Buyer Beware! Know what you're bidding on (negative equity house)

jjoy80

Hi Guys

Just sharing our bad news in the hope that it will help someone. We went sale agreed on a property in early October. It was a vacant house that had been rented. We were promised by the estate agent that it was a landlord who wanted to get out of the rental market and that our offer was exactly what he owed on his mortgage. We said we wanted to move fast and get the kids moved in over Christmas Holidays. We were reassured that everything was in place and "ready to go"

So we were really on top of things appointed a solicitor engineer valuer got the insurances in place, paid the deposits, signed the contracts, paid our solicitor, due to close in a couple of days...

and now suddenly...there was no consent to sale from their lender. They are in negative equity and wouldnt close the sale, nor could they give us a date when we could expect to receive consent from the bank. We discovered on the QT from their solicitor (not in writing anywhere) that the vendor wants to use the sale to get a better deal/debt relief from his bank on the balance he owes. So we are now pawns in his mess.

There was no mention of the debt in the original contracts and a few weeks later his solicitor mentioned a residual balance and said the funds were in place to pay it. That the vendor had the money.

All BULLSH*T.

Through absolutely no fault of our own, we have now paid for an engineer, a solicitor in full, 2 insurance policies and a valuation that aren't worth anything to us. Last week they let us into the house to get the boiler sorted and we paid for a boiler service (we didnt want to spend our money on furniture in case the boiler needed replacing.) So that all happnened and all the time they knew full well that they couldn't sell it. More fools us.

The worst part is that, we are very average people and it has been an immense struggle to get this far. I have children and my 10 year old has been in 10 different rentals at this stage and foolishly i bought him new stuff for his room and assured him that this would be our last move. I am kicking myself for not protecting the kids and keeping them out of it. They pass it on their way to school and even this morning were asking could we plant apple trees. They are so excited, we thought we'd have the keys next week, and at the moment all we have is an empty bank account, a mountain of stress and tears and a pallet of flooring to be returned to woodies. Not to mention the beautiful houses that we have missed out on.

So please, make sure there is a lenders letter of consent to sell. No matter how safe you think you are, no matter how honest the vendors or the auctioneers seem...DON'T believe it. Get proof and protect yourselves and your families. Try not to get over excited like we did.

I have no idea what we are going to do now. The amount of money we have lost, and now we have to try and get our deposit back. It's a very unfair set up.

Michael D Not Higgins

I'm sorry to hear that. However, you should get your deposit back no problem. The deposit is fully refundable until contracts are signed and the sale is closed.

Paulw

Sounds like your solicitor didn't do a good job of due diligence to make sure all was in order for the sale to go through. You should have a word with your solicitor or even consult the Law Society about this.

But, as said already, you should be able to get your full deposit back at least.

whiskeyman

Yet another reason why I refuse to believe anything in the process of house purchase until I'm actually in the door...

Sorry to hear about it OP.
Hope it turns right for you soon.

CaoimheSquee

I have seen this happen before and usually the EA is under the impression the vendor can sell also. Really all they can go on is their word and at the end of the day, they are down a fee now also. I would imagine more and more are asking for proof of ability to sell these days, or certainly should do - it is in the interest of all parties.
Absolutely awful situation though OP, i really hope things work out soon.

irlrobins

I'd be asking serious questions of my solicitor in this situation. He/she clearly didn't do their due diligence. They shouldn't have even allowed you to sign contracts without establishing the liabilities of the vendor.

Also, from my experience, the solicitor only seeks payment of fees when the sale closes.

racersedge

To echo what others have said, I would be having a serious chat with your solicitor. I was in a similar issue when I went sale agreed on a property in late January. My solicitor didn't budge on doing anything such as contracts and the like until the bank gave permission to sell. It took until May before that eventually arrived. Throughout that process the solicitor refused to give an end date to the process because it was impossible to move forward with the deal without bank consent of sale.

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This post has been deleted.

Mink

Absolutely gutted for you OP. I saw your post about it on another forum yesterday and I just couldn't believe it. It also made me wonder about our own purchase & I will certainly be extremely cautious.

If it was the case that the seller was using the potential sale as leverage for debt writedown, well what a sh!thead.

I hope you are able to look past this and continue house hunting & enjoy your Christmas. Don't worry about the kids too much, they are so resilient & the excitement of Christmas will help overshadow any potential disappointment.

Theboinkmaster

jjoy80 wrote: »

Last week they let us into the house to get the boiler sorted and we paid for a boiler service (we didnt want to spend our money on furniture in case the boiler needed replacing.)

foolishly i bought him new stuff for his room

Very sorry to hear that by my god why did you spend so much money on house you didn't own?! That is absolute madness so I hope you've learned your lesson.

Don't spend a money until you have the keys and best of luck finding a new house.

I'd also be looking at the solicitor fees as not sure they did their job correctly....

the_syco

jjoy80 wrote: »

Last week they let us into the house to get the boiler sorted and we paid for a boiler service (we didnt want to spend our money on furniture in case the boiler needed replacing.) So that all happnened and all the time they knew full well that they couldn't sell it. More fools us.

I'd look at getting the money back off the seller, as if he knew he couldn't sell you the house, he then IMO had you pay for the service under false pretences.

Also, as said, talk to your solicitor about the fee you owe him as he didn't do his job correctly. If this is the only thing you've ever used this solicitor for, maybe look at getting another one for the next house you look at?

Parchment

Im so sorry this happened you. The time of year makes it even worse.

I agree with others saying your solicitor dropped the ball.

Casa2

Hi OP,

We are in the same boat after visiting the apartment twice and highlighting to all parts (EA and my solicitor) several times that we didn't want to be involved with a bank sale here we are waiting. Sale agreed in July/2016 our solicitor took her time to do her investigation but never told us about negative equity. We signed the contract in September and already pay for Valuation 2x, Survey and full deposit. After all that vendor solicitor informed that Vendor was dealing with the bank for my surprise. Since than I have been calling and chasing my solicitor, EA and even got in contact directly with the owner. The answer is always the same "Vendor has a lot of property to sell together and he is in negotiation with his bank. Please give him another week". Now the prices are going up, our loan approval will expire and we are 5 months waiting for the keys and all my solicitor can say is "I am sorry". Do we have any law in Ireland that protect the buyers?

by the seaside

Sorry to hear your story. Please don't beat yourself up too much.

Wesser

Surely if you signed the contracts it's a done deal..... No?

caff

Could do with introducing something similar to the scrapped home information pack they had in the UK https://en.m.wikipedia.org/wiki/Home_Information_Pack

Cuddlesworth

Casa2 wrote: »

Hi OP,

We are in the same boat after visiting the apartment twice and highlighting to all parts (EA and my solicitor) several times that we didn't want to be involved with a bank sale here we are waiting. Sale agreed in July/2016 our solicitor took her time to do her investigation but never told us about negative equity. We signed the contract in September and already pay for Valuation 2x, Survey and full deposit. After all that vendor solicitor informed that Vendor was dealing with the bank for my surprise. Since than I have been calling and chasing my solicitor, EA and even got in contact directly with the owner. The answer is always the same "Vendor has a lot of property to sell together and he is in negotiation with his bank. Please give him another week". Now the prices are going up, our loan approval will expire and we are 5 months waiting for the keys and all my solicitor can say is "I am sorry". Do we have any law in Ireland that protect the buyers?

What is stopped you from continuing to look for suitable property's in the last five months?

Sound Bite

Like others have said, I think you have to ask serious questions of your solicitor.

They appear to have done a poor job particularly at a time when negative equity sales/bank consent are common.

Casa2

@Cuddlesworth. Just my believe that everything was fine as I was reassured weekly by my solicitor and EA. I had another views but nothing better came up.

jjoy80

Cheers for the replies all, I know I did a few silly things out of excitement. It just seemed to be running so smoothly, only 2 weeks ago we were arranging with them what furnishings/appliances would remain and they were saying we could keep the white goods but they were going to get the suite of furniture!!! But all the time they knew they couldn't sell!! I just feel so angry with them for doing all that to us and letting it get that far. Mostly I'm gutted for my kids. After all the rentals we've been in I just wanted to provide them with a permanent roof over their heads.

We've decided to leave our deposit sit on the house until we get something else. Ive absolutely no faith in the vendor or the estate agent. I suspect they will use us to get a deal on their debt and then put the house back on the market in summer at a much higher price. Clearly they have no respect for us.

I've booked other viewings already and will buy the next suitable house. It's just a pity there is practically nothing available in our town and we don't want to relocate because kids go to school and we both work here and it saves on a second car and commuting costs etc.

I do think that once a buyer pays a deposit that if the vendor withdraws they should be liable for the valuation costs,engineers report costs etc etc. It's a very unfair system. I've written to my local td...not that he'll bother his arse doing anything!

Very sorry to hear there are others in the same boat. I didn't realise this was a thing until it happened to us and I opened up boards and askaboutmoney and saw that we are one of many who have been caught.

With regards to my solicitor, I'm not entirely sure what else he should have done? He's been very swift and a good communicator to date. The vendors solicitor sent the contracts stating that the funds from the sale were to be used to clear the outstanding ptsb mortgage then 3 weeks later contacted him to say, actually there's money owed as a residual balance but my clients are lodging the money to clear it. Then it appears they just decided not to pay it as they want ptsb to write off their residual balance! I don't even know if they have communicated with their bank at all yet! Anyway as I've said, I'll leave the deposit on it til I've got something else. No faith in them now. Fully believe they'll screw us again if we wait it out.

jjoy80

....... wrote: »

Your solicitor should never have let it get as far as signing contracts if the vendor couldnt sell.

And you should NOT have spent money on things like a boiler without keys.

I just got keys last night, and outside of a deposit on a bed and a table (which would go in any house), I would not spend a penny on the property until I owned it.

The insurances can be cancelled, the deposit will be refundable. Youve lost out on a valuation and a survey - but your solicitor wont be charging you as the sale didnt complete (not to mention his screw up letting you get this far).

It totally sucks though. The whole process with the lack of transparency is appalling.

Yes, I know we shouldn't have spent a cent. Foolish of us. We rang aviva and they are going to refund a chunk of the insurance so that's something. We are out of pocket for the valuation and engineers report costs. And in a great display of stupidity we brought the solicitor a cheque for this fees including the stamp duty when we went in to sign the contract, so we are now at this mercy about how much he returns. Too sick to even think about it. We literally had enough for the deposit and fees and we're relying on the 2% cash back to buy furniture. I'm hoping we will get out at being no more than 2k down...and we will have to take a nice few more months to save that back again (especially as we are getting a rent hike in january). Jesus I'm getting angry again typing this!!!

jjoy80

Casa2 wrote: »

Hi OP,

We are in the same boat after visiting the apartment twice and highlighting to all parts (EA and my solicitor) several times that we didn't want to be involved with a bank sale here we are waiting. Sale agreed in July/2016 our solicitor took her time to do her investigation but never told us about negative equity. We signed the contract in September and already pay for Valuation 2x, Survey and full deposit. After all that vendor solicitor informed that Vendor was dealing with the bank for my surprise. Since than I have been calling and chasing my solicitor, EA and even got in contact directly with the owner. The answer is always the same "Vendor has a lot of property to sell together and he is in negotiation with his bank. Please give him another week". Now the prices are going up, our loan approval will expire and we are 5 months waiting for the keys and all my solicitor can say is "I am sorry". Do we have any law in Ireland that protect the buyers?

Gutted for you. It's a bloody joke. I was thinking about the small claims court as I believe we were knowingly misled by the vendor. I feel like it was fraudulent of them to sell a property knowing that they couldn't.

jjoy80

Wesser wrote: »

Surely if you signed the contracts it's a done deal..... No?

Not until they sign...and they won't/can't

runawaybishop

jjoy80 wrote: »

we're relying on the 2% cash back to buy furniture.

Most expensive furniture you will ever buy. Draw a smaller amount and get your furniture from somewhere that does interest free.

jjoy80

runawaybishop wrote: »

Most expensive furniture you will ever buy. Draw a smaller amount and get your furniture from somewhere that does interest free.

Really? We got got approved with a few banks and brendan Burgess on askaboutmoney recommends ebs as the no.1 lender to use at the moment. So we went with them.

jjoy80

jjoy80 wrote: »

Really? We got got approved with a few banks and brendan Burgess on askaboutmoney recommends ebs as the no.1 lender to use at the moment. So we went with them.

Just to clarify...we can't draw down less...we are drawing down 90% and paying 10% deposit...and the cash back comes after your first month. And we are free to move lenders anytime with no claw back

December2012

If the contract isn't signed you get all of your money back. Request it to be returned to you now.

The money you gave to the solicitor you should also get back, even if he/she charges a partial fee for work done to date (because it's not their fault). they may not charge you a fee, given that it's not your fault either.

Just ask and see, don't worry, you haven't lost all your money.

Is it possible at all that the bank will consent?

Marcusm

Setting aside the issue of deposit, legal fees etc, it's hard to see how permitting/encouraging you to incur expenses on repairing an asset which they are not free to sell to you is not a deception offence; you have incurred a loss and it s hard see that they did not have a dishonest intent. Not likely to help you move it forward though.

jjoy80

December2012 wrote: »

If the contract isn't signed you get all of your money back. Request it to be returned to you now.

The money you gave to the solicitor you should also get back, even if he/she charges a partial fee for work done to date (because it's not their fault). they may not charge you a fee, given that it's not your fault either.

Just ask and see, don't worry, you haven't lost all your money.

Is it possible at all that the bank will consent?

We didn't ask the solicitor for money back yet as we are still processing everything! But he seems like a decent guy...(then again so did the estate agents and the vendor!!)

If it were as simple as getting consent I think there's a possibility...but from what vendors solicitor told ours on the qt...he doesn't want straightforward consent to sell, he wants them to write off or heavily discount his residual balance. So no doubt that will take an age...so, he could easily string us along for an endless amount of months and then ask for more money, or pull the sale or re list it at a higher price! We are entirely at his mercy.

It's a rising market and we can't wait it out. We are going to be hit with a big rent increase in January and now have to sign up to a new lease for 12 months which we didn't want to do, so we think the best decision for the moment might be to leave things be and leave our deposit on it until we find something else. We are going to start looking this week. So disappointing. But have to dust ourselves off, and crack on.

If anyone has other advice I'd be glad to hear it!

K.Flyer

Parchment wrote: »

Im so sorry this happened you. The time of year makes it even worse.

I agree with others saying your solicitor dropped the ball.

More like he didn't even try to catch it!
Your solicitor was useless in this situation and in my opinion should be held responsible for any losses you may now incur as a result of his mistakes.

on_my_oe

No real advice, just something to make you possibly feel better... we had a similar situation and we were dragged along for seven months. There were new builds in the same estate which we ignored as we felt 'good' about the secondhand home, which we felt had been lived in with love, but we eventually realised it was just full of deceit. Once we finally realised we were the pawns in their their negative mortgage negotiations, prices for the new builds in the estate had gone up by €31,000... So being their pawns cost us nearly €35,000 if you factor in solicitor fees, valuation, survey, extra rent etc.

lawred2

irlrobins wrote: »

I'd be asking serious questions of my solicitor in this situation. He/she clearly didn't do their due diligence. They shouldn't have even allowed you to sign contracts without establishing the liabilities of the vendor.

Also, from my experience, the solicitor only seeks payment of fees when the sale closes.

I'd also be asking questions of the vendor's solicitor.. A solicitor can not willfully misinform any party in such legal matters.

Why would a solicitor be lieing on behalf on the vendor?

runawaybishop

jjoy80 wrote: »

Really? We got got approved with a few banks and brendan Burgess on askaboutmoney recommends ebs as the no.1 lender to use at the moment. So we went with them.

Cash back on a mortgage is a gimmick and costs you thousands in compound interest over the term of your mortgage. Probably adds years onto your payments

QuiteInterestin

jjoy80 wrote: »

We are going to be hit with a big rent increase in January and now have to sign up to a new lease for 12 months which we didn't want to do, so we think the best decision for the moment might be to leave things be and leave our deposit on it until we find something else. We are going to start looking this week. So disappointing. But have to dust ourselves off, and crack on.

If anyone has other advice I'd be glad to hear it!

I'm not much use regarding advice on the house sale, but depending on how long you've been living in the rental house, you're not under any obligation to sign a new lease. Once you've been renting for six months you become a Part 4 tenant and are under no obligation to sign a new lease and can stay for up to four years. While the landlord can review your rent once every two years, by not signing a lease, you have the option to leave (provided the correct notice period is given) at any time.

lawred2

runawaybishop wrote: »

Cash back on a mortgage is a gimmick and costs you thousands in compound interest over the term of your mortgage. Probably adds years onto your payments

All mortgages cost thousands in compound interest..

We just remortgaged and knocked 1% off our interest rate and reduced the term by 5 years as a result by keeping the repayment around the same level as we've gotten used to. We will also be getting 7.5k back in a few weeks. Sure the loan will still cost us a fortune like all mortgages but it's a much better place now than we were in a month ago.

Call it a gimmick all you like but I'll take what I can get.

runawaybishop

lawred2 wrote: »

All mortgages cost thousands in compound interest..

We just remortgaged and knocked 1% off our interest rate and reduced the term by 5 years as a result by keeping the repayment around the same level as we've gotten used to. We will also be getting 7.5k back in a few weeks. Sure the loan will still cost us a fortune like all mortgages but it's a much better place now than we were in a month ago.

Call it a gimmick all you like but I'll take what I can get.

Take whatever you like. Not taking the additional years to repay your mortgage and getting interest free furniture is still better.

lawred2

runawaybishop wrote: »

Take whatever you like. Not taking the additional years to repay your mortgage and getting interest free furniture is still better.

I've the best interest rate in the market for my LTV currently... And getting cash back. There was no option available to forego cashback in exchange for a lower interest rate so I'm not sure how we could have done any better. Short of not borrowing at all of course.

by the seaside

runawaybishop wrote: »

Take whatever you like. Not taking the additional years to repay your mortgage and getting interest free furniture is still better.

I would rather have a lower interest rate than cash back, but as I do not have that choice I will take the cash and overpay on the mortgage. It is a bit screwy.

L1011

runawaybishop wrote: »

Take whatever you like. Not taking the additional years to repay your mortgage and getting interest free furniture is still better.

Right now, the rates with cashback are close to identical to those without. Due to virtually all banks offering it.

athtrasna

Can we get back on topic please

Fian

Wesser wrote: »

Surely if you signed the contracts it's a done deal..... No?

in this case the vendor didn't sell because his solicitor pointed out to him he couldn't without the consent of the bank. Even if he had signed he cannot sell something he does not legally own, the bank hold the legal title to the mortgaged property. Had he signed though, the vendor would be in more trouble in terms of liability to the OP.

OP you should definitely follow this up with your solicitor, especially as he has allowed you to pay him before the sale closed. Your solicitor is the one you rely upon to advise you in order to avoid problems like this. In this case it seems there were red flags in advance as well, since the vendor's solicitor mentioned a residual balance. I am assuming that you did not receive advice from your solicitor warning you of the pitfalls which you have not mentioned.

SarahMollie

This happened to me twice, back in 2012 and again in 2013. I'm surprised its still happening as I thought with more and more properties coming out of negative equity that its less of an issue.

In both cases it took months for the banks to say they wouldnt agree - I cannot fathom how this at least cannot be made quicker. The banks should need no more than a few weeks to decide if they're going to come to an arrangement with their borrower or not, but it seems they like to drag their heals in this area and theres nothing you can do.

I did end up wasting money on a survey and a valuation on the 1st property (on the 2nd one I obviously left it to the last minute so it ultimately never happened). My solicitor was a very decent man who only charged me a few hundred € for his time, on the understanding that I'd come back to him the next time (finally succeeded on my 4th attempt - the 3rd one was a whole other story!)

Its very annoying and its good of you to share your tale OP as I'd say a lot of people could sleepwalk into the same situation. I cannot understand how your solicitor let you sign contracts - you should look further into this.

Buyer beware.

Claw Hammer

Paulw wrote: »

Sounds like your solicitor didn't do a good job of due diligence to make sure all was in order for the sale to go through. You should have a word with your solicitor or even consult the Law Council about this.

But, as said already, you should be able to get your full deposit back at least.

What should the solicitor have done? What is the Law Council?

TheAnalyst_

Sue the owners if you think they have any assets.

Lumen

I hope your solicitor put in a clause for terminating the sale if it doesn't close by a specific date, or else you will not be able to pull out.

paul71

Claw Hammer wrote: »

What should the solicitor have done? What is the Law Council?

Request documented consent to sale from any lender of vendors solicitor. I spotted the "Law council" too, Law society I believe is the intended name.

sadie1502

This is definitely negligence on your solicitors behalf.

Ray Palmer

People really seem to have this messed up in their views. Firstly the OP probably didn't sign the contract for the sale and an agreement for the solicitor to act on their behalf instead. Usually the buyer signs last and then is handed the keys.

The buyer's solicitor cannot control or be privy to the seller's dealings with the bank. They could not have known what the bank would do so not at fault. The seller also doesn't know what the bank will do until they actually say what they will do. It takes the bank along time to do this

When buying a house all costs are really on the buyer's side. If it falls through you just have to suck up the costs.

Not nice but there isn't actually anybody at fault. The bank made a decision and may have indicated all along they were in agreement and then a more senior staff member can say no or it could be simply a new policy. Raising house prices is a valid reason for the not to take a loss from the seller. Why should they when they could get all the mortgage back if they wait?

Never spend money on a house you don't own but I would ask for the boiler service money back.

Claw Hammer

paul71 wrote: »

Request documented consent to sale from any lender of vendors solicitor. I spotted the "Law council" too, Law society I believe is the intended name.

The Law Society do not deal with complaints of negligence. It is standard, and I presume it was done, to ask if the property is mortgaged and to ask for an undertaking to clear the mortgage. It seem to me that the selling agent told lies to the o/p.

Casa2

I am dealing with the estate agency at the moment as I know that the solicitor can do nothing anymore.
EA is telling us that they really didn't know about the multiple property that the seller is trying to negotiate with his bank before signing the contract. In fact I think the owner is messing everyone EA, my solicitor and myself so now I will call him every other day including Xmas and New year until he gets annoyed and next month he will get a 28 days notification of completion that all I can do I guess if I am stressed he will be as well. I will make sure that he will never forgets my voice and I am very good on that.

Before the solicitor allowed you to sign contracts he should have requested a copy of the title deeds and consent of sale. Since the deeds are in the posession of the bank, these could not have been produced. Last time I bought it was frustrating waiting for this, but there was no question of going further without them.
It does seem like your solicitor slipped up here and is the person to chase. The EA is not the person who takes responsibility for the conveyancing.