In contract for new-build, but mortgage offer about to expire - can I proceed with a different lender?

Bronte said:
Have you spoken to him?

Can you afford the new mortgage rates?
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Once it became apparent that the site was stalling and since we were getting fobbed off by the agent, I asked him to chase the developer's solicitor for an update, but he was adamant that there was no legal basis for anything due to the 36 month timeframe in the contract.

Mortgage rates aside, I certainly can't afford risking my 120k deposit.
 
RedOnion said:
This is standard new build contract stuff. There's a signed contract in place.

@LLB123 you need to talk to your solicitor, and take their advice. Not listen to people who are surprised by standard contract terms.
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Sadly our solicitor can't/won't advise us on the safest course of action, just the legal one. And if we can't get out of this because mortgage offer has expired then we have no choice but to sit on our hands and hope.
 
RedOnion said:
Your question is a legal one; can you terminate the contract and get your money back.
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Solicitor is adamant the developer has the full 36 months to mess us around before we're in any position to complain. So it seems not.
 
RichInSpirit said:
Hi LLB123.
Who has the use of the €120,000.00 at the moment?
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The developer. Due to the amount not being wholly Homebond protected, I'd initially queried the solicitor if it could be held in trust/escrow of some kind to be safe, but seems this isn't how it works for new-builds because they need the use of the money in order to carry out the build.
 
LLB123 said:
The developer. Due to the amount not being wholly Homebond protected, I'd initially queried the solicitor if it could be held in trust/escrow of some kind to be safe, but seems this isn't how it works for new-builds because they need the use of the money in order to carry out the build.
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Did your solicitor think this was wise? Did you? What happens if your mortgage doesn't come thru and the builder goes bust?

How much will Homebond pay? I thought Homebond was for structural defects?
 
ClubMan said:
It's almost certainly the standard "subject to funding/loan" clause.


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Looking at link 2:

Representations have been made to the committee that the economic circumstances surrounding the issue of the 2009 practice note have changed and that the recommendation should change accordingly. It is also contended that developers cannot access funding from their lending institutions unless they can confirm that there are unconditional contracts for the sale of sites and units in place.

- I wonder who made those representations to the Law Society
- Presumably it was the builders body, who are a very powerful block. Maybe the CFI. They are often on the radio
- And I wonder who advocated for the small guys, the buyers, who have nobody to represent them.

At least the Law Society said no.
 
Bronte said:
How much will Homebond pay? I thought Homebond was for structural defects?
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Homebond is an insurance company.
Max deposit protection is lower of 50k or 10% of price. But this is reduced by the value of the work already completed. So nothing in this case.

Bronte said:
What happens if your mortgage doesn't come thru and the builder goes bust?
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If developer goes bust, buyer is a creditor in liquidation.

All standard stuff with buying a new build.
 
Bronte said:
Did your solicitor think this was wise? Did you? What happens if your mortgage doesn't come thru and the builder goes bust?

How much will Homebond pay? I thought Homebond was for structural defects?
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Solicitor advised this was standard for new-build deposits, and we'd hoped risk was minimal since house was already constructed. Hence the mess I'm in now!
 
Have you talked to the developer? I know a couple of cases where developer was happy to hand back deposit and then sold for a higher asking price to people on a waiting list. My friend was the sucker who paid the higher asking price...
 
LLB123 said:
Solicitor advised this was standard for new-build deposits, and we'd hoped risk was minimal since house was already constructed. Hence the mess I'm in now!
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So you were giving money to a developer and owning nothing? I fail to see how this was not risky as it's a lot of money when there were no guarantees of getting your money back if the developer went bust. As has happened before. Because you'd be bottom of the pile of creditors after the banks.
 
Bronte said:
So you were giving money to a developer and owning nothing? I fail to see how this was not risky as it's a lot of money when there were no guarantees of getting your money back if the developer went bust. As has happened before. Because you'd be bottom of the pile of creditors after the banks.
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Agree completely, and despite our best attempts to mitigate as mentioned above, our solicitor advised that this was standard stuff for all new-builds.
Given that the house was all-but ready at the time and agent was telling us completion was pretty much immediate - as opposed to say an off-plan situation - we felt that the purchase was safe enough as it could be.
But obviously didn’t anticipate that the entire project might run into trouble and our loan clause so specific to prevent a straightforward out should things go awry.
 
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