Gardner Leader

Delayed Completion

Everything’s packed, all the meters are read and the removal men arrive to start loading up your possessions. You then receive a telephone call advising you that completion will not be taking place today due to an unforeseen problem. Other than the practical considerations of possibly unpacking your tooth brush again, what happens next? Robert Parsonson, Property Solicitor at Gardner Leader Solicitors, offers some helpful advice.

‘Thankfully, this is a rare occurrence and often happens because of a delay in transferring the money through the financial system.

The most important thing to be aware of is that although there is a contract in place for completion to occur on that date, the fact that it does not happen is not enough for anyone to rescind the contract or pull out of the transaction.  Your solicitors might issue a “Notice to Complete”, which gives notice to the defaulting party that completion should have taken place and, if it does not complete within ten working days, you would then have the right to rescind the contract.

Your solicitors will establish what had gone wrong, and when the problem is likely to be resolved.  Actually getting you moved would be the priority and would normally be the next day or within a few days.  As soon as the defaulting party can complete, you must be ready to do so or then be in default yourself. 

Once completion takes place, you then move into your new house, but you have incurred extra costs, normally through no fault of your own. What can you claim and who from?

The Standard Conditions of Sale governing the contract and the rules of Common Law state what you are allowed to claim. To begin with the defaulting party would owe a payment of compensation interest on the sum of money outstanding. The interest rate is typically 4% above base rate and a daily rate is calculated.  You can then claim for each day that completion is delayed. For example, for a sum of £200,000 outstanding, the daily compensation interest is £50.68 per day.

You are also entitled to claim for the losses you suffer as a result of the breach of contract, although you must always take steps to minimise these losses. For example, the extra interest payments you will have to make on your mortgage for each day completion is delayed can be claimed, as can your extra removal/storage costs. You could also claim the costs of hotel accommodation if required, although these must be reasonable so staying at the Ritz for a number of nights would be seen as excessive.
 
You would claim from whichever of your buyer or seller had not been able to complete. This would most likely be your buyer, who had failed to supply the funds needed to buy your property. You would make a claim from them even if it was the fault of someone lower in the chain. This is because your contract is with your buyer and they will then have a contract with their buyer and so on.  So if it was the fault of someone lower in the chain your claim is passed down to them. The effect of this can mean that in a long chain, the person who causes the delay can end up with costs of hundreds of pounds even for only one days delay.

Once the defaulting party is able to complete, you must then complete even if payment for your losses remains outstanding. This applies to the claim for losses, but not the compensation interest. You would be entitled to withhold the Transfer document until the interest is paid. Typically once a delayed completion takes place there will be a payment owed for losses as either the defaulting party will need time to arrange further funds to be available, or the other parties in the chain are unable to confirm the exact figures for their loss until after completion. 

Your solicitor will then chase up this payment, a process that can often be protracted for a couple of months. However, if the defaulting party ultimately does not pay, your only recourse would be to the small claims court. You would be entitled to claim the losses and they would be very unlikely to have a defence. You would have to pay the court fees that could range from £30 - £108.  While the court fees would also be recoverable, you would only be allowed to claim costs up to £80 if a solicitor represents you, so most people take action themselves.

Ultimately this is a very rare situation with everyone involved in the process working hard to avoid such problems. When a problem does occur it is usually down to human error and the person who has defaulted, like you is also packed and ready to move. Completion problems are an inconvenience, but with a good solicitor such problems are not insurmountable – on the day your goal is to move into the new property and that should almost always be possible.

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