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protecting house purchase deposit

protecting house purchase deposit

Postby adviceseeker » Fri Dec 15, 2017 2:32 pm

Hi, My wife & I are in the process of buying a new build property off plan with assistance from the Governments Help to But equity scheme. The completion window as given on the developers draft contract is July/August 2018 & extended completion date end February 2019.
We have a mortgage offer which will expire in 6 months time. Should we be unable to secure an equivalent replacement mortgage prior to completion we would lose our 10% deposit (payable at exchange). Can anyone please suggest any clauses which we might incorporate in the contract to protect our position (in particular to recover our deposit) should we, due to not fault of our own (such as lending criteria becoming more stringent or a drop in value of the house on revaluation) be unable to extend our existing mortgage or fail to get a new equivalent offer in place for completion? The contract also indicates that we would have to pay the seller for the bespoke fittings that are part of the purchase incentive if we are unable to complete after the seller serves notice.
Any ideas would be greatly appreciated
Thanks in advance K & J
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Re: protecting house purchase deposit

Postby atticus » Fri Dec 15, 2017 6:15 pm

I dare say clauses can be drafted that will achieve the desired effect. However, the contract as a whole needs to be considered, as it is possible, likely even, that other provisions will also need to be specifically dealt with.

Then you wil have the problem of the other party saying "no".
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Re: protecting house purchase deposit

Postby theycantdothat » Fri Dec 15, 2017 10:06 pm

I think that rather than getting the builder to agree changes to the contract (which may prove difficult if not impossible) you should be looking to the mortgage provider to confirm the offer is open to February 2019. They must be used to cases where properies are bought off plan.
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Re: protecting house purchase deposit

Postby diy » Sun Dec 17, 2017 12:27 pm

Personally, in your shoes, I'd stand back a bit and ask myself these questions:
- Can I risk it that this house will still be available at this price nearer completion and therefore not put a deposit down?
- Are there other properties I should consider rather than falling in love with just one?
- Am I comfortable I understand the market and its current direction?

There are obviously regional variations, but I personally think there is a bit of a downward ripple, or at the very least a levelling off. I think we may be heading in to more of a buyers market. Therefore you might get the developer to accept a substantially smaller holding deposit.
My suggestions are not legal advice
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Re: protecting house purchase deposit

Postby dls » Sun Dec 17, 2017 6:30 pm

Buying off-plan is alway srisky - and we may be coming to a time when it is even more risky.

Why would they make this offer if they had the money to complete. If they haven't, why would you consider lending it to them when their bankers won't.
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Re: protecting house purchase deposit

Postby diy » Mon Dec 18, 2017 2:01 pm

Its probably more of an academic debate, than a practical one you can argue, but I fail to see why you would be billed for bespoke fixtures if you pull out of the contract? This fixtures aren't yours to take away and will eventually be sold as part of the building with the new purchaser. At this point, they are already keeping your deposit. We should be some way off the point where they have to commit to the colour of your kitchen worktop and bathroom tiles.
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Re: protecting house purchase deposit

Postby atticus » Mon Dec 18, 2017 3:06 pm

Diy - those bespoke fixtures and related payment obligations will be in the contract.

The contract is a document which records what the parties have agreed and their respective obligations towards each other.
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Re: protecting house purchase deposit

Postby diy » Mon Dec 18, 2017 3:22 pm

Yes I appreciate that. But you aren't going to be getting them, so you are paying for something you have no title to. They become part of the property once installed and cannot be removed. If you pull out, the house builder will be selling them to the next buyer. Of course the next buyer may not want them or may not want to pay for them or pay full price for them. In which case I can understand a charge, but as it stands you lose the deposit (which is to cover the costs of pulling out) and you get charged for custom fixtures. It seems a neat way to say the deposit is really 12% not 10% or whatever.
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Re: protecting house purchase deposit

Postby atticus » Mon Dec 18, 2017 4:37 pm

This is why the OP should understand the contract, what he would be committing to.

If the builder buys and installs bespoke fixtures, but another buyer wants something else, who do you say should pay?
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Re: protecting house purchase deposit

Postby dls » Tue Dec 19, 2017 8:44 am

How is the deposit to be held? Stakeholder, or agent?
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