Buying A Newbuild Property Exchanging Contracts
When you purchase a newbuild property contracts can be exchanged well in advance of the property being ready to move into. Developers are very keen to have the exchange tied up within just a few weeks of the offer. It can be several months before the property is ready for you to occupy.
As per the first in our series of Buying a Newbuild articles completion dates on newbuild properties take various forms and therefore, before entering into exchange of contracts you need to fully understand the risks. When you exchange you are entering into a legally binding contract. Newbuild properties can be complex so instructing a firm of solicitors who have the specialist knowledge to advise you is imperative.
Consideration needs to be given to both the mortgage offer and any related sale (see the third Newbuild article). Most mortgage offers are valid for 6 months from the date of issue. It is more difficult in current times to extend an offer, so there is always a chance that it would expire before completion. If the property was not ready to occupy before the mortgage offer expires, a new offer will have to be applied for, there may be additional fees to pay and interest rates may have increased, so the original offer terms could change significantly. Also in times of economic uncertainty, the value of the new property may be less and the lender may reduce the amount they are prepared to lend. The buyer cannot withdraw from the purchase and must pay the full price as stated in the contract, or face being sued by the developer. Therefore, all the terms of the contract must be explained to you fully before you exchange contracts.
If the buyer has a property to sell and the buyers of that property are happy to wait for the new build property to be built, it is important that the same completion date provisions are included in that contract, giving the buyer of the new build property the option of pulling out of their sale contract without being liable to be sued by their buyer. In most cases the buyer will often sell their property first and move into temporary accommodation and wait for the new property to be built.
Having a restricted time to exchange contracts on a newbuild purchase requires a firm of solicitors who are protecting your best interests and providing the best advice available. Buying a property is a major investment and it can be a very stressful time.
Tollers have extensive experience of acting in the purchase of new build properties. For specific advice about buying a Newbuild Property Talk to Tollers call 01536 276712