Sale agreed waiting for buyer to get a mortgage approved

[Tia]

We have agreed and sale and signed the compromis 5 weeks ago and buyer has paid his deposit. However since then nothing has happened and buyer is apparently waiting to see if he can get a mortgage and tried several banks. I appreciate things take a while in France and are done different from the uk but

1. Is is normal for it to take this long just to get a mortgage approved. 2. Whats happens to the deposit if he doesnt get one approved (assume he will just get that back and leave us out of pocket)

In the contract it states the sale has to be completed by 4th July.

My feelings are that they are unable to get a mortgage and in the meantime the house isnt being advertised for sale and we will loose all this years holiday rentals as well

 

 

[woolybanana]

Well, Tia, mortgages are tight in France, so your take is perhaps right. Not sure though how long the buyer has to try and find a willing lender

[AnOther]

Is it written into the compromis that the buyer needs a mortgage ?

If is is and he can't get one, and can prove it, then you will have to give him his deposit back. Not sure how that leaves you out of pocket though ?

If it isn't then he may forfeit the deposit it but it's not automatic so don't be expecting the Notire to hand you a cheque when he fails to complete on the agreed date.

[NormanH]

I had this problem last year.

The first mortgage was refused, and the second was delayed as it was at the end of the year, and there was no more money left.

In the end it didn't happen until the New Year brought a new 'envelope' of available credit, but it did go through in the end.

Overall it took from September with a date for early November signing until the real thing which happened in January.

Obviously I can't say if yours will be OK, but it is certainly true that things can drag on and on.

[idun]

And for once I am going to say something positive about some Agent Immobilier in France and how they justify their fees. The one we used guaranteed that they would only send prospective viewers who could get a mortgage for the appropriate amount. They had a no time wasters policy and it worked.

 

You haven't mentioned how you are selling your house? If you didn't have specific dates mentioned, then you are in limbo.

 

See your notaire about it.

 

[P-D de Rouffignac]

If at the time of signing the 'compromis de vente' the buyer has made it clear that he/she is buying subject to securing the necessary financing (and you agree to this as vendor), then he/she is allowed about another 40 days - including time to search for a mortgage and to accept an offer from a bank/mortgage provider (there is included a cooling-off period under consumer protection laws which covers this acceptance period).

In order not to (potentially) forfeit any deposit paid should the buyer not succeed in securing financing, he/she must demonstrate and prove 'due diligence' in approaching one or more banks, and provide evidence of his/her efforts. The additional approx 40 days is not simply an extended cooling-off period during with the buyer does nothing.

Ideally, one prefers to deal with cash buyers who have funds in place (for example, from the sale of another property, savings etc) or at least an assurance from their bank (sometimes referred to as a 'letter of comfort') that they will be offered a mortgage. In a slower market one tends to welcome all comers and hope for the best......

Some agents however continue to market a property during tihs period, noting that it is however 'under offer', just in case the sale falls through.

In this case the vendor speaks of 'about 5 weeks' and as suggested it is time to find out whether the buyer has received and accepted a mortgage offer by speaking to the agent or Notaire.

[Benjamin]

As an aside.

The front page headline in the Business Section of last Sunday's Times reads "France To Rescue Mortgage Giant".

Caisse Centrale du Credit Immobilier de France (3CIF) (never heard of them either) a lender of some €33 billion in mortgages could be nationalised.

I would think against this backdrop mortgages may be a bit scarce.

[Tia]

Many thanks for all your advice. It is very difficult for us to find out what is going on as the estate agent seems to ignore our emails and when they do answer they just state it will be next week now due to 'days off in France' . I have asked them for a copy of the contract as we havent even been sent a copy of that after we signed on the 13th April.  There was no mention of a mortgage when we were signing this came later so it will be interesting to see whether it has been noted on the contract.

The reason we will be out of pocket is because whilst this is going on we can not rent the property out for holiday rentals which we normally have July and August booked up by now and we have in fact had to cancel some bookings for June and also the house is not being advertised so if it falls through we have lost nearly three month of advertising

I suppose we just have to sit and be patience which is not one of my strong points.

 

[AnOther]

As far as I understand the French system mortgage advances are fairly strictly based on ability to pay and not too concerned with the actual property. If that is correct I fail to see why it should not be a relatively simple matter to have a mortgage in place prior to beginning viewing.

Perhaps though the buyer is trying to overstretch the normal parameters and that is why he's having difficulties in securing a loan.

I don't know about the French but in my days of mortgages in UK it would

never have entered my head to go house buying without having one agreed

in principal.

[PaulT]

Did you sign the Comris at the agents premises or via a Notaire?

If the Notaire, contact him / her

Paul

[P-D de Rouffignac]

I read with concern your last email that (a) it was not made clear to you at the time of signing the 'compromis de vente' whether the buyer was paying cash or seeking a mortgage (and thus allowed to benefit from the longer period of retraction/cooling-off); and (b) that you did not receive a copy of the 'compromis' on signature or soon afterwards, even if the buyer was signing using a power of attorney. Both are quite unacceptable. If there has been some delay in getting the signature of the buyers (unimaginable in practice) then they have effectively prolonged the cooling-off period.

I think also that the situation regarding the summer rentals should have been clarified, for example, whether the buyer required immediate possession (or defering this till after your summer rental period), or would take on the retnals - all this to protect you in case the sale were to finally collapse.

Can I suggest you contact the agent or Notaire urgently to clarify the situation.

[andyh4]

[quote user="Tia"]

The reason we will be out of pocket is because whilst this is going on we can not rent the property out for holiday rentals which we normally have July and August booked up by now and we have in fact had to cancel some bookings for June and also the house is not being advertised so if it falls through we have lost nearly three month of advertising

[/quote]

 

Tia

you are obviously a glass half empty person.  I am a glass half full.

If the house had been sold and completed you would not have had any income from bookings this summer.

 

If there had been no offer at all, would you have rented out this summer and risk putting off a potential maison principal customer who could have been just around the corner?

 

I am not sure you have lost anything except perhaps a month or two's interest on the cash you might have had, had the sale gone through earlier - and no guarantee that the notaire or anotehr problem would have brought the completion closer.

 

ANO

From personal experience (and at a time when mortgages were easy to get, rather than now) "in principle" mortgage offers are open for a much more restricted time scale than in the UK.  In fact we had to push the notaire to close before our offer expired.  It could well be that genuine buyers will be reticent to get the agreement before they are clear what and where they want to buy.

[P-D de Rouffignac]

I don't think that successfully buying or selling French property depends on whether you are an optimist or a pesimist. Important sums of money are involved and it is a question of getting things right from the start. The French property business is one of the (few) areas that normally works well but a lot depends on the competence of the professionals involved, and the ability of the buyer/seller to understand the process, check the facts and be alert to mistakes than can be made.

As in the present case, it is not unusual for a property to be sold subject to the buyer obtaining a mortgage but correct procedures have to be followed. Ditto in the case of a property sold that is let or about to be let (for example for the summer season) - againt this can be negotiated correctly to the satisfaction of all parties. I would never ever suggest to a client that it's okay to risk losing a few hundred euros. That would be sloppy, unprofessional.and unethical.