Exchange and Completion on the same day

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    Exchange and Completion on the same day

    Hi,


    We had found a chain free property in December and agreed a price, got mortgage offers approved so on by the beginning of Feb this year. However, we suddenly learnt in Feb that the seller is not actually chain free and he was looking to by as well. Although not very happy, we waited since then and last week the sellers solicitor came back saying that they are ready and would like to exchange asap but completion is on 28th of June. Our mortgage offers ends on 30th of June, and in case this moves to 1st of July we will be paying extra 12.5 K stamp duty even we manage to extend the offer. My solicitor proposed to do both exchange and sale on the same day because he is worried that in case something goes wrong for whatever reason, we need to give 10 working days notice, and this will move to July - which means no mortgage offer and extra stamp duty so on. and the chain is not keen to do it. We are at the bottom of the chain so we are buying without selling and in case we do not buy chain will probably collapse.

    I cam getting tons of calls and emails from various people including agent we are buying but also others on the chain and this is really making me stressed as we have been waiting for months and the only reason we started the process was that we have been told that they were chain free in December in order to catch the end of March deadline.

    I am not sure what kind of guarantee we can give to the chain to make sure that this happens in some way but I am open for creative ideas without taking the risk of this moving to July.

    thanks




    #2
    Hi jjsmi7h, it sounds to me like a classic situation when no chain becomes a chain (suddenly out of the blue). You should not be harassed by any party, the communication should be with your Solicitor and the other parties in the chain and your Solicitor should be keeping you updated. Assuming there are 3 properties, that is yours and two above you, if you start the exchange process on the morning of the proposed date of completion, send the completion funds the night before to each respective parties solicitors (less mortgage funds if they are not in yet) to be held to order pending exchange and completion, then a simple line up of calls in the morning of the day of completion, leaving ample time to exchange and complete and redeem any mortgages etc, should be fine. HOWEVER, it all depends if all legal parties in the chain play ball, if one does not, your not going to complete in time. Also if it gets too late in the day. Any further questions, let me know.

    Comment


      #3
      Am I missing something here? Can you not exchange tomorrow (14th) and complete on the 28th?

      Comment


        #4
        Hi The Expert,

        It seems your proposed solution might work. So, is it really possible to send the full funds earlier - the night before ? not sure if my solicitor will accept it?


        Kape65 - the issue with 28th of June completion is that in case someone in the chain not ready, we need to give them 10 days notice to complete. that means we will run into July with no mortgage.

        Comment


          #5
          Hi jjsmi7h, yes of course, your solicitor can send the funds the evening before completion day, in fact it is possible to send funds to the top of the chain, but all depends on your solicitor. Ask your Solicitor to request a completion statement from your vendors Solicitor so he knows exactly how much to send. It also depends when he receives your mortgage monies, some lenders send the day before, others on the day. The risk with a simultaneous with mortgage funds is the lender cannot guarantee what time funds will be despatched. Your Solicitor should know all this, maybe remind him/her. I'm speaking from experience here

          Comment


            #6
            thanks, I will talk to him.

            One of the challenges here is to convince the people of the chain to arrange moving companies so on. Understandably, they worry that in case we change our mind in last minute then they end up with cancellation fees so on. Any idea what we can propose them to resolve this problem..

            i.e can we tell them that in case we change our mind to buy in last minute we are happy to cover their cancelation fees up to a maximum of a value etc.

            Comment


              #7
              Indeed, however I always advise to select a company that does not require a non refundable deposit. This is why it is imperative that completion take place as early as possible on the day of completion and certainly before the removals start loading their vans. Hence, sending funds the night before ensures a nice and easy 9.15am chat over the phone to exchange and complete. It would be sensible to offer a refund to the vendor and their vendor, but limited to any non refundable deposit they may have paid.

              Comment


                #8
                so, we can tell them that we are happy to compensate their losses & efforts of preparing for moving (up to say 1.5K) in case we fail to complete our sale on a specific date. This can give some confidence to the others in the chain. I am not sure how this can be legally formalized. It will be probably easy between us and the seller. but we do not have contacts of other solicitors in the chain.


                Comment


                  #9
                  Your Solicitor will include (upon your request) a special condition in your contract to obligate you to this, upon exchange. The other parties may require an exchange of contracts before completion to make sure this is effective. Its a catch 22 scenario.

                  Comment


                    #10
                    Hi Expert,

                    Can you please step by step explain whats needed s I can share with my solicitor in detail? I tried to explain to him yesterday but was not very successful.

                    Basically, we need to make sure 2 things 1- The seller has confidence that we wont be wasting his time and money due to moving costs in case we change our mind in the last minute, 2- He will be able to buy his property as well otherwise he will be homeless.

                    thanks

                    Comment


                      #11
                      Hi jjsmi7h, subject to all parties in the chain managing first to secure removals for the anticipated completion date, you simply need to ask your Solicitor to draft a clause into your contract that will obligate you to reimburse all removal costs that have been paid in advance by the other parties in the chain (of course, only those deposits which are non-refundable) should completion not be effected on the anticipated completion date. It will not be difficult for your Solicitor to draft this clause. What is going to be more challenging is having all parties in the chain secure (provisionally) a removal company for the anticipated completion date (whether or not any deposit (refundable or non-refundable) is required. The agents in the chain may assist in chasing all parties to move quicker on this. Nobody will be homeless if completion is not effected. Mortgage funds should be requested a day before completion on the Certificate of Title (should time permit) which your Solicitor will fax/email to your mortgage lender. This is to facilitate the transfer of funds on the day before completion. There are always going to be risks with a simultaneous exchange and completion and any party can decide even up to the anticipated completion date to change their minds. If your Solicitor doesn't get the above, then there is no hope.

                      Comment


                        #12
                        thanks Expert,

                        so, lets assume that exchange and completion will simultaneously happen on 28th of June, Monday. I assume that we can request the funds to be in my solicitor's account on 25th of June, Friday. So, we can confirm that we will pay any cancellation fees of the parties involved in the chain in my contract. then we can pay the funds and complete Monday 28th morning 9.15 as we have the money? I am not sure how long it will take for money to reach the seller's solicitor's account? 2-3 hours? Do you think, all parties will have enough time to complete and transfer the monies across in a chain of 4 properties in 1 day?

                        thanks


                        Comment


                          #13
                          Hi jjsmi7h, a simultaneous with 4 properties in the chain and requesting funds on a Friday for a SIM on Monday is a logistics nightmare. Especially if there are mortgages to redeem on each property. It can be done, of course, but keeping this simple, all parties in the chain need to synchronise. Each respective Solicitor should prepare a completion statement (including all apportionments if leasehold) and send to the other. A second completion statement is prepared to enable the party at the bottom of the chain to transfer funds direct to the top of the chain (to be held to their order pending exchange and completion) and the parties in the middle to prepare a second completion statement for the balances to be transferred. Furthermore, it is also advisable, to start the exchange process from both ends of the chain, so a standard release from the bottom and a reverse release from the top. This will save time, which you are very short of. Good Luck

                          Comment


                            #14
                            In our case, we are at the bottom of the chain as we are not selling but just buying.

                            I am still not sure how we can technically send money directly to the top of the chain - we do not have the full list of the properties and solicitors involved in the entire chain. I believe we have 4 properties involved including bottom and top and 2 in the middle. Is there anything legally stopping us to send the money directly to the top as we are actually not doing a transaction with them formally....?

                            In this case, probably solicitors also need to be very organised, right??? and agree the idea and work hard on the day of completion.


                            Comment


                              #15
                              Hi Expert,


                              as an example, lets assume that Person A (me - at the bottom of the chain) buying from Person B for 500, and B is buying from Person C for 400 and again assume that no mortgages involved. So, what you are saying that we can pay directly 400 to C, and then remaining 100 to B. Is that correct?

                              Comment

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