Q. I recently agreed to buy a new house from a developer at a knockdown price. I exchanged contracts and paid a 5% deposit to secure the contract. However, just before completion the bank withdraw my mortgage which meant I was not able to complete the purchase. My solicitor has told me that I have now lost my deposit and could be liable for further damages. This is so unfair. What can I do?
A. Under the standard conditions of sale (the terms which regulate property transactions) you will be highly unlikely to do anything I'm afraid. Your deposit can be claimed by your lender and they may also be able to claim a further 5% penalty (I would need to check your contract to confirm this) plus any fall in value of the property - i.e. if the developer later sells for £10,000 less they could claim that £10,000 from you plus costs!
Although such a calamity was once unheard of, there is now increasing evidence that cash strapped banks or cold-footed lenders are now withdrawing mortgages with alarming regularity.
Because of this, Patterson, Glenton & Stracey Solicitors are now insisting upon a term being inserted in all of our buyers' contracts which would give our clients the right to rescind the contract in the event of their mortgage being withdrawn. In this way we are able to protect our clients from this catastrophic situation.
Be guided by the experts. Contact Keith Swan of Patterson, Glenton & Stracey Solicitors by email at ks@pgslaw.co.uk or on 0191 456081. Patterson, Glenton & Stracey Solicitors have provided legal advice to the people of South Tyneside for over 125 years. For details of their full range of services and to view previous Gazette articles please log on to www.pgslaw.co.uk.
