Renting one's future home until sale completed

In message , MM writes

Only if you actually end up being the buyer, and this can only be certain if you start the tenancy after exchange of contracts, (on both properties preferably). But if you do this, I dont see the sense of a tenancy arrangement.

In general, the 1st time buyer at the bottom will only be able to offer a 5% deposit, because they are getting a 95% mortgage. The seller usually accepts this, (as he has no alternative). The seller, (you?), then either has some savings to add to this 5%, to make it up to 10% of his purchase, or asks their seller if they will accept their buyers deposit, (amount), as deposit, and so on.

In all instances, if any buyer fails to complete after exchange of contracts, they are liable for the full 10%, and will be sued for it, (unless they are the 1st time buyer, who may not be worth suing).

In message , MM writes

Why on earth did you imagine you couldn't move out of your own house whenever you liked?

Maybe you could try to come to some arrangement where the vendor would let you move stuff up and leave it in the house after exchange of contracts, but not live there or rent the property as a tenant?

The worst that would then happen for their POV is that in the unlikely event of you not completing they just need to dump your gear in skip if you didn't remove it.

I don't know! This is all new to me. Was your first sexual experience entirely satisfactory? ;) Don't you wish you could have had some practice beforehand? At some point in life, and with me it's much later than most, one has to do new things, which at the moment for me is moving house for the first time. Already my ulcers are playing up. My head is full of worry. I hate it all. But it has to be done.

Now all I need is some more practice for that first... ah, well, maybe I won't go there!

MM

This is quite worrying. I will be rolling in loadsamoney *after* completion, from the proceeds of the sale. But until then I am not able to pay any deposits! However, my estate agent assured me that the deposit is passed up the chain. But if I take your comments on board that could mean that I may have to first complete on my property, then exchange on the next, so as to ensure I have the funds available for the deposit.

(But what about all those people who are basically skint, yet still manage to move? Their equity - maybe £400K - is all tied up in the property.)

Ah, failing to complete is another matter. With me, since the price I have achieved exceeds by far the purchase price I shall be paying, there is little possibility of my not completing on my future purchase.

MM

You should easily be able to get a short term secured loan from your bank as one option if you have to do anything.

Otherwise your solicitor should be able to advise on whether deposit that you receive on your sale can be used as a deposit on your purchase.

.andy

To email, substitute .nospam with .gl

All parts of this Usenet posting are Copyright by the author. It may not be sold in any medium, including electronic, CD-ROM, or database, packaged with any commercial product, or published in print or electronic form without the explicit written permission of the author. The copyright of included material belongs to the original author.

Absolutely.

Well, now, it's like this........ When a daddy blackbird.....

It is one of the most stressful things in life, for sure, not least of which is that you are not in control of all the pieces

IMM may be able to advise - he has a lot of personal experience............

.andy

To email, substitute .nospam with .gl

All parts of this Usenet posting are Copyright by the author. It may not be sold in any medium, including electronic, CD-ROM, or database, packaged with any commercial product, or published in print or electronic form without the explicit written permission of the author. The copyright of included material belongs to the original author.

In the meantime I have this morning filled in and taken the various forms back to the solicitor, who advised that I need not worry. The deposit from the FTB will suffice. Apparently 10% of the purchase price used to be a mandatory requirement by law, but this is no longer the case.

MM

That's good. One less thing to be concerned about.

.andy

To email, substitute .nospam with .gl

In general, the exchange takes place for all properties in the chain on the same day. You use the deposit you receive from your buyer as deposit for the property you are buying. The crucial part is that once you exchange you are liable for the full 10% deposit if you do not complete. Even if it's not your fault, you will still lose your deposit and have to recover it from those lower in the chain. You should not have to come up with any extra cash up front for the deposit. If you do, get a better solicitor.

MBQ

Why on earth would you think you couldn't move out before completion? Who's going to stop you?

Make sure you arrange buildings insurance on the new property from the date of exchange.

MBQ

This is important.

I know somebody where there was a fire after exchange in the property that they were buying. They proceeded with the purchase and the insurance company paid for temporary accomodation during rebuilding. In the event they ended up with a much better outcome than buying the original house.

.andy

To email, substitute .nospam with .gl

Ah, that's a point I had not considered. Of course I *had* considered the insurance, but only from the completion date. As a matter of interest, does my current insurance still continue to cover the property I am selling AFTER exchange, or is it the responsibility of the buyer? What if the house burns down 1 minute after exchange has occurred? (Yes, I am fully aware that "Paranoia" is my middle name...)

MM

True, but negotiable. On my last purchase, risk (and hence requirement for buildings insurance) transferred on completion, not exchange. The house had sitting tenants and I was unwilling to assume the risk or find what would probably be a very difficult (and expensive) policy to obtain. After all, who is going to insure a property that you don't own against malicious or accidental damage caused by tenants (who were not UK citizens) that you don't have the names of, let alone can vouch for.

Christian.

Continue to insure it yourself. This is no paranoia. Although risk normally transfers on exchange, you don't want to get in the situation where (a) purchaser forgot to insure (or had a policy that was inappropriate, perhaps due to the policyholder not living at the address), thus (b) purchaser is unable to proceed with purchase (mortage company refuses to advance against non-existent house) and (c) purchaser is now bankrupt. You would just be left with your 5% deposit, a smouldering wreck and no-one worthwhile to sue.

Christian.

no-one worthwhile to sue.

Oh, and I forgot, the people you were buying off will want compensation from you, in addition to the 5% you'd already sent them.

Christian.

But when does transfer of legal ownership occur? On exchange or on completion?

MM

Completion I thought.

Timbo

Yes, completion. Up until then you can still pull out of the deal, though as has been said after exchange of contracts you suffer loss of deposit + potential legal action

AFAICR I didn't need to gte insurance on our current house until completion.

On completion. Exchange is when you make a legally binding promise to buy. Unless a special clause is inserted into the contract, that promise is binding even in the event that the house is destroyed, which is why the risk transfers by default on exchange. It is a simple matter to reverse this in the contract before exchange.

If you pull out, they can charge you their reasonable costs that you incur for them, such as compensation to those up the chain, legal expenses, interest payments, loss of bargain (in a falling market). Most people would take the deposit and run, though, unless they had reason to think you had deep pockets (which isn't likely if you've failed to complete a purchase).

Christian.