Bought Off-Plan property ... problem with getting mortgage

[patel_m]

Hi,

I bought an off-plan property (260k) around 2 years ago which is coming near to completion.

I have had a survey done (estimated 170k) and the bank is only willing to lend 60% of the estimated value (102k) for a buy-to-let propoerty. I have already paid 15% deposit (39k) and have around 30k to pay towards the property.

This adds up to 171k which means I am 89k short.

Since I have signed a contract couple of years ago, the property developer is not willing to budge on the price and I am unable to raise any additional cash.

If I don't go through with the completion, I will loose the deposit and the developer can sue me for any losses.

I'm thinking rock and a hard place.

Can someone provide some suggestions for any options? Ideally I would like to pull out of the deal without loosing the deposit and getting sued.

Any thoughts?

[MWB]

Visit your local citizens advice bureau for some advise in the first instance, there are a lot of people out there in the same situation as you and they should give you some sound professional advice.

IMHO If you dont complete you will definetly loose your deposit, what you dont want is to be sued for the difference when they do eventually sell the property. The developer may / should have taken out insurance against non completions so you shouldnt be sued for any shortfall.

Good Luck.

[SameOldStory]

http://property.timesonline.co.uk/to...cle4913206.ece

[SameOldStory]

http://www.dailymail.co.uk/property/...-high-dry.html

[SameOldStory]

Basically, from the above and other reading around (I can't find the article I read last month about it), it appears that if you can't complete, the only chance you have to get the deposit back is if losing it would cause you can convince a judge it would cause you great financial hardship to lose it, I wouldn't hold out much chance of that with another £30k in the bank. I haven't seen any references to anyone succeeding with that.

There are a few comments stating that if the builder cancels the contract and keeps your deposit they can't then sue you for extra losses. All the legal references from these discussions says that's wrong and keeping the deposit and canceling the sale are non-prejudicial.

As to them suing you for additional losses. They can, once it can be proven what they are. However, it looks like there are 2 aspects considered when the case is judged:
1) Can you afford to pay at all, if you can't then it won't happen.
2) The relative hardships on you if you pay to the builder if you don't.

[SameOldStory]

he developer may / should have taken out insurance against non completions so you shouldnt be sued for any shortfall.

Good Luck.

Surely this insurance is only to cover the developer, not the buyer, I would assume that they would only cover in the event the buyer is unable to pay losses, or if they do cover all losses, the insurance company would be able to persue the non-completer.

[abaxas]

Look at it like this..

If your employer let you work for them and not pay you, would you be hacked off.

You have to buy, or face them coming after you to pay or for any losses if/when they do sell.

[Knighter]

I wonder how fast OP would want to pay up if the current market value was 80K more than he was due to pay.

[SameOldStory]

I wonder how fast OP would want to pay up if the current market value was 80K more than he was due to pay.

or whether he'd be asking if he could sue the builder for canceling his contract (giving the deposit back) and selling at the higher price.

[MWB]

I wonder how fast OP would want to pay up if the current market value was 80K more than he was due to pay.

Yes indeed, but the OP doesnt have the money to complete hence the reason they have to withdraw from completing altogether due to a substantial shortfall in the mortgage offered, i would have thought that they would rather complete and wait for the value of the property to come back and then sell and recoup their deposit at the very least instead of dropping £40k.