Things to look out for when you are in a Chain

Chain transactions are very common in Conveyancing since it is normal practice finding a buyer or a seller who has a property to sell or buy themselves. The key to ensuring things progress smoothly is to make sure the respective parties are organised and keep their conveyancers informed of any change in circumstances or potential problems.

It is ideal if you are at the bottom of the chain since it means you need only concentrate on one transaction. However the down side is that if anyone is late completing above you, there will be a ripple affect that will work its way down to you so you may find yourself in a position where you cannot complete on the day you were supposed to.

Here are some matters to bear in mind:

Mortgage Funds

If you are buying with a mortgage your mortgage funds should be requested the day before to ensure there is no delay in receiving them. They can then be sent to the seller’s solicitor first thing on the morning of completion, if you are at the top of the chain. Some Conveyancing Solicitors may even send the funds the day before requesting that the funds are held strictly to their order.

Agreeing Exchange and Completion Dates

It is important that you agree to dates that are good for you and that you will be able to comply with. E.g., it is no good agreeing to a completion date one week after exchange if you are relocating abroad therefore needing further time to arrange removal and shipping out of your belongings. Similarly, if the property is tenanted you cannot complete with the tenants in there so completion must take place after they have left. Dates should be discussed with your conveyancer so as to ensure they are fully aware of what your circumstances are.

If you are far down the Chain

It is like a domino effect – if there are problems at the top of the chain, they will work themselves down to you. For example, if there is a delay in getting the mortgage funds near  the top of the chain, this will delay  all the other transactions so you may not be able to complete on the contractual completion date.

Costs for late completion in a chain

It is very important that the conveyancer reads the special conditions in the contract carefully to see whether additional costs (in addition to costs under the standard conditions of sale) relating to late completion are payable eg, removal costs and costs relating to bridging finance. If these conditions are to stay in the contract they should be included in the contracts further up and down the chain to ensure that the costs are recoverable. In practice this is quite difficult to agree upon so it is a matter for the parties to negotiate amongst themselves.

Sometimes a party will agree on costs being capped at a certain amount so as to ensure they do not become sky high in the event of late completion. It is very important that the parties are made aware of exactly what is contained in their contracts so they have an idea of what they will be paying if things go wrong.

A Notice to Complete is usually served on the defaulting party if they are late completing, requiring completion to take place in ten working days.  If there is a chain, the Notice is then served by the parties further along the chain.

Problems on the Day

It is very important that you inform your conveyancer if you are going to be unable to complete. They can then contact the other parties and warn them. It is much better to inform everyone as early on as possible so things can be rearranged by the parties if possible. Leaving it until the actual day to let everyone know causes frustration and anger and it is likely that the aggrieved parties will want to claim as much as they can for late completion rather than negotiating matters in a calmer manner a day or two before.