Can I Get My Deposit Back on New Build Property?

Q.

I purchased a new build flat in October 2007 and exchanged around December 2007. The scheduled completion for the development was September 2008.

I had a mortgage offer which is due to expire on the 23rd December 2008, however the developers have overrun and now claim that completion will only occur at the earliest February 2009.

I'm now faced with not being able to find a suitable mortgage and was wondering whether I have any rights to pull out of the deal and get my deposit back or to enforce the developer to lower his price in order for me to attain a new mortgage offer?

A.

Because of the financial and contractual implications here, your best bet is to seek professional legal advice in the matter. It’s impossible to be specific without knowing what’s in the terms and conditions of your contract.

However, there are certain things worth noting. When you exchanged contract on the goods involved – the flat – you were given to believe that you would be able to take possession of it on completion this September.

To that end you obtained a mortgage which was largely dependent upon the goods being delivered in a reasonable time – in other words, when promised.

Now you find that the developers say that they’re not able to deliver those goods within that reasonable time. That means the offer dependent on that will expire.

So, in many ways, the Sale of Goods Act 1982 would seem to apply in this instance. That states that the goods or services must be provided with reasonable skill and care, at a reasonable charge, and within a reasonable time.

It would seem that by overrunning by five months, the goods are not being supplied within a reasonable time, leaving the developer not in compliance with the Act.

But, and this is a big but, you also need to read the contract, and whether it includes any time clauses stating a definite completion date for your flat, or whether it allows for overruns (which it might), and if so, for how long without any kind of penalty.

Since these contracts are often in legal terminology and can seem confusing or even ambiguous, you might find it a good move to consult a legal professional before deciding on your next move.

Given the current decline in the housing market, as long as the contract doesn’t weigh against you, there’s a very strong chance you’ll be able to force the developer to reduce his price.

The next part, of course, will be obtaining a new mortgage, and with the tightening of credit, unless you’re exceptionally creditworthy, that might not be so easy, and the rates will not be as good as the offer you had.

In other words, without a lot more information it’s unfortunately impossible to give you a concrete answer. But good luck with both the flat and the mortgage.

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