Contract for Sale - Subject to Loan

19-11-2015 1:38pm #1

I'm in the process of buying a house which the vendor is in a hurry to sell in order to purchase another house which now appear to be under time pressure.

I paid a deposit to the EA in September but, between one delay and another on the vendor's side, my solicitor only received the Contracts with no Closing Date, @ 3 weeks ago. As part of her pre-Contract Inquiries she asked for a closing date, she also requested a "Subject to Loan" clause.

Last week she (finally) received a response to her inquiries suggesting a 4 week closing date and an unconditional contract. So when I sign the contracts and pay the 10% deposit, it becomes non-refundable and if there are any delays/problems on the bank side.

I am fully approved and have organised life and home insurance through my broker. My concern is that with a two week closing period between signature of contracts (this Saturday) and closing date (two weeks hence), if there is any slight delay at the bank (a processing delay, cheque issue delay (it's PTSB so only cheques), a document they decide they need) if for any reason I can't close in two weeks, I lose my 10% deposit.

The vendor's solicitor is absolutely insisting on an unconditional contract but my solicitor is insisting on a clause which says that if the loan cannot be drawn down in time due to circumstances beyond my control, my 10% is refundable.

I am, of course, following my solicitor's advice and it looks like the purchase won't happen. The EA wants me to meet the vendor tonight to try to come to some kind of arrangement but that feels like a waste of time. The whole situation seems overly fraught to me.

I just wondered if anyone had been in a similar situation and/or if this timing is unreasonable.

Ri_Nollaig · 19-11-2015 2:15pm

Sounds to me like your solicitor is doing a good job. While its probably not likely for there to be an issue at this stage and and once a cheque is received its considered 'paid' as of that date, not when it clears. Its still better to have an added safety net.

Really am surprised they are the ones who wont move on this, as its hardly a massive request. While I have never been in a similar situation I think they are the ones under more pressure than you, and if they pull out now will force the whole thing to start over. Surely they don't want that... right? Either way, I would 100% follow your solicitor's advice, they are the only ones in the whole arrangement who are actually looking out for you!

jimmycrackcorm · 19-11-2015 2:20pm

Ri_Nollaig wrote:

Really am surprised they are the ones who wont move on this, as its hardly a massive request. While I have never been in a similar situation I think they are the ones under more pressure than you, and if they pull out now will force the whole thing to start over. Surely they don't want that... right? Either way, I would 100% follow your solicitor's advice, they are the only ones in the whole arrangement who are actually looking out for you!

This 100%. But make sure the reason is communicated to the other side so they aren't guessing if you're trying to pull a last minute change.

comuirch · 19-11-2015 2:41pm

Agree with the above posts and your solicitor. While i can understand the vendor's position in wanting to close quickly, they need to be realistic in that sometimes drawdown of mortgages takes a little longer than expected, and this is outside the control of solicitors/buyers

I'd imagine they'll fold pretty quickly if you say you're pulling out......it will take them considerably longer to find another buyer and get them to the same stage you're at.

19-11-2015 2:50pm

Ri_Nollaig wrote: »

Sounds to me like your solicitor is doing a good job. While its probably not likely for there to be an issue at this stage and and once a cheque is received its considered 'paid' as of that date, not when it clears. Its still better to have an added safety net.

Agreed. There is no reason at all to believe that there may be any problem with funding thanks to my the excellent Solicitor and Mortgage Broker. However, I can't be reasonably asked to risk thousands of Euros with a two week closing window.

Ri_Nollaig wrote: »

Really am surprised they are the ones who wont move on this, as its hardly a massive request.

I assume it's because the vendor's solicitor can't get them anything but an unconditional purchase agreement for the house they want to buy.

My solicitor seems says that it would be standard for the vendor to have a clause in their purchase agreements stating that the purchase was dependent upon the sale of their existing property, maybe their solicitor overlooked this, I don't know.

jimmycrackcorm wrote: »

But make sure the reason is communicated to the other side so they aren't guessing if you're trying to pull a last minute change.

That's the only reason I'm meeting the Vendor and the EA. I want to make sure she understands my position and that the source of the delays are not on my side. I've even had to ask my surveyor to certify a planning exemption and provide a Declaration of Identity for their property!

19-11-2015 2:57pm

comuirch wrote: »

I'd imagine they'll fold pretty quickly if you say you're pulling out......it will take them considerably longer to find another buyer and get them to the same stage you're at.

This is what I don't understand ... her options are to collapse the sale now or wait two weeks and collapse it if, for some reason, I can't draw down the mortgage ... OR the two sales go through.

The options they are giving me however are to collapse the sale now or sign an unconditional agreement and risk losing my 10% deposit and then her sale collapses ... OR the two sales go through.

As far as I'm concerned, my options are to collapse the sale now or sign a contract conditional upon the loan being drawn down in time (for their near future closing date).

cpier · 19-11-2015 3:07pm

We found ourselves in the same situation, however it was our Solicitor who insisted that the Contracts were "Subject to Loan". The Vendor did not want to agree to this, however like yourself we did not want to loose our 10% deposit paid.

I know it is hard but you have to detach emotionally from the idea of the house, and take it as a business transaction. We instructed our solicitor to write to the Vendor's Solicitor and advise them that if she did not agree, in writing, to the Contracts being "Subject to Loan" within 48 hours of the date of the letter, we were pulling out. It worked for us.

I know it is a huge gamble and something I am not recommending flippantly but like other posters and yourself has mentioned it is very unlikely that the Vendor is willing to risk loosing the sale and starting all over again.

I am sure you are very confident in receiving your full mortgage and it wont be a problem but 10% I am sure is a lot of money for you to loose with nothing to show for it.

Best of luck.

19-11-2015 3:16pm

cpier wrote: »

I know it is hard but you have to detach emotionally from the idea of the house, and take it as a business transaction. We instructed our solicitor to write to the Vendor's Solicitor and advise them that if she did not agree, in writing, to the Contracts being "Subject to Loan" within 48 hours of the date of the letter, we were pulling out. It worked for us.

I'm renting so I'm not in a chain and I'm not afraid to pull out of the transaction. I've made it clear what my position is and have to assume that the problem is that they've boxed themselves into a corner on the other side and simply can't accept my terms ... although what kind of contract they've signed/intend to sign on the other side is beyond me.

The only hope I have is that the EA or their solicitor for some reason hasn't communicated the fact that I'M prepared to pull out so they don't realise yet that they can't talk me round.

The J Stands for Jay · 19-11-2015 3:17pm

It's more than just 10% that's at risk here, you can be sued for breach if contract if you don't complete. You could be liable for the vendors costs and (not sure if I'm remembering this but correctly) potentially up to the full value of the property.

19-11-2015 3:19pm

McGaggs wrote: »

It's more than just 10% that's at risk here, you can be sued for breach if contract if you don't complete. You could be liable for the vendors costs and (not sure if I'm remembering this but correctly) potentially up to the full value of the property.

True, I wasn't even pulling at that thread yet because them asking me to risk the 10% was enough reason not to do it!

cpier · 19-11-2015 3:24pm

Well, that may have been what did it for us, the Vendor was not purchasing another property. She was moving out and renting. She had moved out of the property in March, so the property was empty whilst we were in the process of the closing the sale. Between one thing an another, mostly planning issues that the Vendor was not willing to pay to rectify, it took us 6 months to get the keys.

Also our Solicitor was not very helpful and we had to make all decisions ourselves, they had all the legal basis covered, but when it came to offering an opinion on how to get around obstacles we were on our own.

I guess at the end of the day I don't think you should sign Contracts and that are not "Subject to Loan".

You are going about it the right way though, communication is key, we kept communicating the the EA and like you say told him we were very interested in completing but we wouldn't be pressured into things we were not happy with.

23-11-2015 10:25am

Deleted User wrote: »

I assume it's because the vendor's solicitor can't get them anything but an unconditional purchase agreement for the house they want to buy.

Just to finish this up ... I met with the vendor last Thursday and she seemed completely clueless about the whole process or what she should/could expect from her solicitor. I showed her the e-mail detailing the compromise my solicitor had offered and explained to her that she was risking nothing while I was taking a massive risk. She had no clue about any of it and she said she'd talk to her solicitor on Friday.

On Friday, I told my solicitor about the meeting and asked her to convey my final offer (clause or close down) which she did, stating that if it was accepted, kindly ask the EA to return my booking deposit.

Next thing, the vendor's solicitor calls my solicitor and starts to rant and rave at her ... how dare we threaten to close down the sale (as she had done earlier in the week) and how dare we expect HER client to take all the risk. My solicitor calmly explained that no-one had to take any risk if the vendor had a "subject to sale" clause in her purchase agreement and there was no way her client (me) was taking such a big risk.

Turns out the absolute cow hadn't even bothered to ask for such a clause, in spite of the fact we'd been stating our position for two weeks at that point. She rang the solicitors of the house my vendor is buying asked them to insert a condition, they agreed immediately and then I got my clause.

I've signed the contract and, while I'm glad it's over and I have my house, I can't believe how pig ignorant the vendor's solicitors have been, bullying and shouting like a child not getting their way. All completely unnecessary. :mad:

Ri_Nollaig · 23-11-2015 10:34am

Glad you have it sorted now.
In for Christmas!

But does sound like you had a good solicitor, while they didn't!

Contract for Sale - Subject to Loan

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