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Stuart J
Stuart J, Solicitor
Category: UK Property Law
Satisfied Customers: 19531
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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Advice on getting back the deposit for off plan property

Resolved Question:

Advice on getting back the deposit for off plan property
Submitted: 8 months ago.
Category: UK Property Law
Expert:  Stuart J replied 8 months ago.
Thank you for the question. It is my pleasure to help you with this today. Please bear with me if I ask for more information.
Were contracts exchanged? If so, when?
When did you pay the deposit?
How much?
Is it a deposit or reservation fee? Can I have full background details please? Thanks
Customer: replied 8 months ago.
Hi Law, please see below the reply from my solicitor. I paid total of £2k reservation fee and £7375 to purchase 2 off plan apartment in 2011.


Dear Lawrence,

Thank you for your email.

As you are aware, contracts were exchanged in 2011 for the purchase of these apartments. At the time there was a projected completion date of 2013.

The deposit on exchange was paid to the sellers' lawyers.

I have written to those lawyers and, as you are aware, also spoken with the solicitor who was handling the case.

I have subsequently asked her in writing to confirm whether or not her client company is still trading ( despite numerous references to the company on the Internet I can find nothing definitive to state that the company has been wound up), and to tell me where you money is being held.

She has yet to come back to me.

I suggest that the best first step would be for me to write to her ( in the absence of any information about any alternative solicitors that may have been instructed) and the company directly giving them notice that you intend to rescind your contract and also giving them 7 days to return your deposit. Thereafter we can issue a County Court action in the small claims court for the return of the funds.
Do you authorise me to do this?

Yours sincerely
Expert:  Stuart J replied 8 months ago.

At this stage in time, your solicitor makes absolute sense.

But please see what I say at the very end because there is a costs issue/risk

 

Whether the builder is in breach of contract would depend on what provision there was in the contract documentation with regard to a completion date. There should really be a long stop provision whereby you are not hanging on for ever waiting to complete because of that happens, then mortgage offers expire and people’s financial circumstances change.

 

In the absence of any completion date provision in the contract documentation, then the time between exchange and completion must be “reasonable” and I think that “reasonable” is certainly approaching after what is almost 2 years and may be nearer to 3. Indeed, it may have been and gone, as indeed, 2013 has almost. It really comes down to when the projected completion date was supposed to be in the contract. If the company is not trading because it has gone into liquidation, you are left with dealing with the liquidator. If the company has not gone into liquidation then you are faced with suing the company. If the court then he subsequently goes into liquidation, the litigation would be dealt with by the liquidator. But you are then an unsecured creditor and the chances are that you will see little, if any, of your money.

 

It is small claims court matter and therefore even if this goes to court and you lose for any reason, you will not have to pay the other side’s legal costs. However, do bear in mind that even if you win, you will not get your solicitor’s costs back. And if your solicitor is charging, including VAT, £200 per hour, that can be a massive chunk of whatever you recover.

 

Indeed, if you do not recover anything, you may end up with a legal bill and no money, so this will cost you even more. Something you need to be acutely aware of and I would ask the Solicitor to confirm at this early stage (he should do anyway. But ask for confirmation of who will pay his costs either, if you lose in court or if the company goes into liquidation.

 

There is a substantial costs risk there which you need to be aware of.

 

Does that answer the question? Can I answer any further specific points?

Customer: replied 8 months ago.

Thanks for your answer, what do you think of new home warranty here? I was told I can get back the money by claiming it? Will it be negligence on both sides of solicitors if new home warranty is not put in place?

Expert:  Stuart J replied 8 months ago.

Is the warranty in place? The usual schemes are Zurich or NHBC. Your solicitor should have dealt with that as part of pre exchange matters. Your solicitor asks for it and the seller provides it.

I would raise it with the solicitor BUT it only applies if the builder goes out of business or took money fraudulently

Customer: replied 8 months ago.

the builder has disconnected their phone lines and investors are expressing similar situation on moneysavingexpert. I amvery much doubt there is any. If no warranty in place who is liability for my money? Seller or buyer solicitor?


If the builder goes bust, how they going to pay me back via small claims court?

England and Wales Orders & Judgments

Name Court Name Case No. Date Amount Status

FRESHSTART LIVING LIMITED ALTRINCHAM 3QT36212 20/08/13 £5,140 Unsatisfied Judgment

FRESH START LIVING LIMITED SKIPTON 2QZ46740 19/04/13 £4,528 Unsatisfied Judgment

FRESH START LIVING LIMITED NORTHAMPTON 2YN26468 18/01/13 £659 Unsatisfied Judgment

FRESH START LIVING LIMITED NORTHAMPTON 2QZ22139 01/11/12 £18,416 Unsatisfied Judgment

Expert:  Stuart J replied 8 months ago.

I think that based upon the series of judgements, the chances of you getting money are remote. So think twice about going to the Small Claims Court. You have given details of three different companies and it appears that as very often happens, they set up a limited company for each of the sites. You only have a claim against the solicitor if the solicitor has been negligent and at this stage, I would not say anything but simply ask the solicitor for a copy of the new build warranty. It should be in place at exchange

Expert:  Stuart J replied 8 months ago.
PS It might be covered by architects cert which doesnt pay out in these curcumstances
Customer: replied 8 months ago.

thats why I don't like small claim court. last question, is the new build warranty cover the deposit and what if i raise to legal ombudsman?

Expert:  Stuart J replied 8 months ago.

If you think the solicitor has been negligent, the first thing to do is raise it with the solicitor himself and then with the complaints partner. The Solicitors Regulation Authority and the Legal Ombudsman will not deal with issues of negligence because the solicitor has insurance for that. What they will deal with however, is inadequate service by a solicitor. If the service of the solicitor has fallen below that which would be expected. Now I know that you are thinking that negligence and lack of service are virtually the same thing, but they are not. Therefore, if you do not get satisfaction from the solicitor if you believe the solicitor has been negligent, and you do not get it from the firm’s complaints partner, then when you write to the Solicitors Regulation Authority, you need to couch it in terms of poor service.

 

here is some reading for you

 

http://www.cml.org.uk/cml/handbook/englandandwales#C1984

 

and here

 

http://www.cml.org.uk/cml/handbook/certificates

 

 

 

Stuart J, Solicitor
Category: UK Property Law
Satisfied Customers: 19531
Experience: PGD Law. 20 years legal profession, 6 as partner in High Street practice
Stuart J and 2 other UK Property Law Specialists are ready to help you

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