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Our buyers want to start work on a loft conversion straight after exchange - what should we do?
Daniel Shein's article first appeared in Financial Times Property on 7th June 2018
It took us forever to sell our house in London. We’ve finally found buyers, but they want to start work on a loft conversion straight after exchange. We don’t want to lose the sale but surely this would put us in a risky situation?
In short, yes. This is extremely risky. This type of request for early access should be refused wherever possible.
Why is it so risky if we have exchanged contracts?
The main risk is that the buyers start the works and fail to complete the purchase of the property — that is quite rare, but it does happen. Although your solicitor is holding their deposit, which may provide you with some comfort, you could be left with a building site. The deposit might not be enough to cover the cost of completing the works, or reinstating the property.
Will the buyers’ works be covered by our insurance policy?
Under the Standard Conditions of Sale, the property is at the risk of the buyers from the date of exchange. But even if you continued to maintain your building insurance policy, the works would almost certainly not be covered.
Is there any other incentive we can offer the buyers?
You may consider giving them access between exchange and completion to “measure up” in preparation for the planned conversion. If you go down this route, your solicitor should prepare an early access licence in which you clearly define what the buyers can and can’t do and ensure that they return the keys to the agents at the end of each day. This could be accompanied by the obligation that the buyers assume all insurance arrangements coupled with liability for paying council tax and utility services from exchange onwards. Remember to check the property regularly and the people coming and going — or ask the agent to do so and to keep you informed of the situation at all times.
This article first appeared in Financial Times Property.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.