Problem with closing on a house

blueturnip

Ok, long story short...

We were due to close on a house tomorrow, a few issues during the week but all seemed OK.

Spoke to our solicitor at 5pm today to find out the following:

It appears that a relative of the vendor is going to give money to assist in discharging the amount due on the mortgage.
This relative is looking for a letter from the bank seeking to be released from certain obligations but has not received this.
The relative will not give any money before receiving this letter.

Does anyone know what this means? Do banks do these sort of letters?

I guess it means it could drag on for ever and ever?

I will be speaking to our solicitor again next week, but just wondered if anyone had any thoughts?

Thanks in advance

sadie9

I was involved in something like this before. The discharge letter is a standard enough thing. It would all be done by the seller's solicitor. In my case the seller's discharge letter was lost at the last minute and had to be replaced, because the previous solicitor went out of business. If the discharge letters are not right it could mean that for example, when you went to sell the house in 10 years time, there would be a trail back to this person looking like money was still owed on the house you own, as such, and that would cause you problems in selling it. So they do need that letter to say everything was paid off and there is no further obligation from their end.
In our case it wasn't that they couldn't do the letter it was just a matter of getting the right person on the phone at the bank to do the job, without it being passed from Billy to jack.
Hard to say how long it will take depending on how actively the sellers are on top of the problem to get it fixed. Just keep chasing it your end is all you can do. It's fierce frustrating I know especially if you like have the move arranged for a certain day and then it doesn't happen it can cause huge headaches...

TheDriver

i am more concerned that your solicitor didn't have all this well checked out before you signed a contract i.e. that the house was in negative equity and this should have been sorted before you signed. talk to you solicitor

Milk & Honey

Negative equity is the sellers problem,not the buyers. It is not for the solicitor to the buyer to investigate negative equity. The buyers solicitors job is to make sure that he gets an undertaking to clear all loans or debts charged on the property prior to closing and not to close until it is done.

killers1

blueturnip wrote: »

Ok, long story short...

We were due to close on a house tomorrow, a few issues during the week but all seemed OK.

Spoke to our solicitor at 5pm today to find out the following:

It appears that a relative of the vendor is going to give money to assist in discharging the amount due on the mortgage.
This relative is looking for a letter from the bank seeking to be released from certain obligations but has not received this.
The relative will not give any money before receiving this letter.

Does anyone know what this means? Do banks do these sort of letters?

I guess it means it could drag on for ever and ever?

I will be speaking to our solicitor again next week, but just wondered if anyone had any thoughts?

Thanks in advance

It's common enough and should only take a day or two to resolve. The bank will be happy to give the discharge letter as the loan will have been repaid. As another poster said it's just a case of the person authorised to sign these letters getting around to it.

blueturnip

Thank you all for your replies! Much appreciated.

It doesn't sound too serious then and is just some more red tape.

I feel a bit better now, pity we were all set to start moving this weekend!

Thanks again.

TheDriver

Milk & Honey wrote: »

Negative equity is the sellers problem,not the buyers. It is not for the solicitor to the buyer to investigate negative equity. The buyers solicitors job is to make sure that he gets an undertaking to clear all loans or debts charged on the property prior to closing and not to close until it is done.

Indeed true but in the current climate, solicitors for buyers get a statement of fact from the sellers solicitor that all is in order so that closing won't be held up or the seller knows the bank won't let them sell unless its in order.

Funnyonion79

Hi I'm having a similar problem.

We were supposed to sign contracts this week (3 mths after putting down booking deposit) but our solicitor received a letter this morning from the vendors solicitor, saying that the vendors are currently in negotiations with their bank about the negative equity on their mortgage and their application is with the credit committee of the bank and they are waiting for a decision on this so they'll let us know when they hear anything.

WTF??? Our solicitor says that they should never have issued contracts until they had this sorted because the house is not theirs to sell while there is still negative equity attached. Our solicitor is saying that the vendors are hoping that the bank will do a deal for them on their NE which he says is highly unlikely. Also it could take months for the bank to make a decision on this and we could end up waiting months and still having to walk away from the house if there is no deal to be had.

He recommends giving them a deadline and withdrawing our offer once the deadline passes. Anyone any experience of this and what was the outcome? It's easy for our solicitor to say walk away, but we've emotionally invested in this house. I'm due to give birth to our second child in 3 months and have planned to have a homebirth in this house. I've arranged for my daughter to start in a new Creche in a few weeks time. We've bought furniture for this house. I really want it. I cant walk away without knowing we've exhausted all avenues.

The vendors reluctantly accepted our offer initially which was 50k less than the asking price. Initially they had refused it, saying they couldn't afford the NE on a price that low and if we could increase our offer by 20k, then they'd accept. We couldn't oblige as we only got mortgage approval for the amount we offered so after thinking about it, they eventually accepted our low offer. Based on this I'm thinking that the NE that they're trying to get a deal on is only about 20k.

Anyone have a similar situation with a happy outcome? Or any advice? Should we walk away?

StillWaters

Wow, that was very cheeky of them to sell without having their banks consent. They can't have been upfront with their own solicitor either. Give them a deadline of another week or so, then walk away.

Funnyonion79

Funnyonion79 wrote: »

Hi I'm having a similar problem.

We were supposed to sign contracts this week (3 mths after putting down booking deposit) but our solicitor received a letter this morning from the vendors solicitor, saying that the vendors are currently in negotiations with their bank about the negative equity on their mortgage and their application is with the credit committee of the bank and they are waiting for a decision on this so they'll let us know when they hear anything.

WTF??? Our solicitor says that they should never have issued contracts until they had this sorted because the house is not theirs to sell while there is still negative equity attached. Our solicitor is saying that the vendors are hoping that the bank will do a deal for them on their NE which he says is highly unlikely. Also it could take months for the bank to make a decision on this and we could end up waiting months and still having to walk away from the house if there is no deal to be had.

He recommends giving them a deadline and withdrawing our offer once the deadline passes. Anyone any experience of this and what was the outcome? It's easy for our solicitor to say walk away, but we've emotionally invested in this house. I'm due to give birth to our second child in 3 months and have planned to have a homebirth in this house. I've arranged for my daughter to start in a new Creche in a few weeks time. We've bought furniture for this house. I really want it. I cant walk away without knowing we've exhausted all avenues.

The vendors reluctantly accepted our offer initially which was 50k less than the asking price. Initially they had refused it, saying they couldn't afford the NE on a price that low and if we could increase our offer by 20k, then they'd accept. We couldn't oblige as we only got mortgage approval for the amount we offered so after thinking about it, they eventually accepted our low offer. Based on this I'm thinking that the NE that they're trying to get a deal on is only about 20k.

Anyone have a similar situation with a happy outcome? Or any advice? Should we walk away?

Just an update: I rang the estate agent going mad that this hadn't been sorted and was set to drag on indefinitely and told te estate agent we wanted an honest upfront answer from the vendors as to whether they were in a position to continue with the sale.

The EA just rang me back there to say that the vendor is alarmed that we are about to pull out. The vendor said that he has been in negotiations with the bank about the NE for the past 3 months and he says that it has all been sorted. They are just waiting for the paperwork/letter from the bank to confirm this. He says the letter his solicitor sent to us should've stated this and NOT given the impression that they were waiting on a decision.

He's trying to get a hold of the solicitor to see what the hell is going on. He's going to try and speak to his bank either directly or through his solicitor to get a date of when they'll receive the letter so that the sale can proceed. The estate agent also told us that the vendor has a rental property on hold ready for him to move into around the middle of this month so it would appear that the vendor is serious about selling and has the means to do so.

Any thoughts?

bjak

Sounds to me like you are being strung out. Solicitors are very careful with what they write. I would place more reliance on what the vendor's solicitor writes than what the vendor says.

Suggest you decide how long more you are prepared to wait, put that in writing to the vendor indicating if not fully closed by that date you want to renegotiate the price downwards or else refund your deposit plus interest.

Funnyonion79

Thanks for the replies. We're going to try and get a more definite answer today as to what's been going on and what the status is and then we will instruct our solicitor to write to them giving them a deadline for the bank documentation to be received, or else we're withdrawing our offer and walking away.

I'm just hoping that we don't have to do this. I'll be gutted.

stevenforward

just wondering how things finished out for all of ye? my situation is very very similar to funnyonion79's. my solicitor is advising to set a short timeframe for a deadline and then walk away. Verbally we're being told by vendor/EA it is all sorted with the vendor's bank, but still waiting for it to come through in writing.
Many thanks

Funnyonion79

Hi Stevenforward,

Long story short - instead of going through our solr - we rang the EA and put the pressure on there directly, telling him we were so angry that this hadn't been already sorted and we had no option now but to walk away, as we didn't have another 3 months to wait. (even though we really had no choice but to wait it out)

The vendor really believed we were about to pull out so bit the bullet and got the money from family members instead of waiting for the bank to make a decision on whether to write off the NE.

Our solr had the paperwork from the bank within a week of the vendor lodging the funds so looks like we're on track now to close 6th sept.

Best of luck!

bjak

Great news. Best of luck with your new home.