The majority of new build homes are still being constructed at the time you place a reservation for one with your developer. While you would have viewed the show home on site, your actual plot may still only be markings on the ground.
Purchasing a property that is still yet to be built will often mean agreeing to have a completion on notice with the developer.
But what does this mean?
A completion on notice means that you will instruct a solicitor to act on the conveyancing of your new home in the usual way and they will submit the standard searches and enquiries. Once your solicitor has reported to you and you are all signed up, exchange of contracts will take place with your 10% deposit being paid but no fixed completion date set. This differs from a usual conveyancing matter where at the point of exchange you agree a date for completion with your seller and you then have a definite moving date which cannot change.
Exchange will instead take place on notice, which simply means that once the property is ready, the seller’s solicitor will confirm the same with your solicitor (this is the ‘notice’). From the time of notice being provided completion must then take place within a specified period (usually seven to 14 days depending on your contract terms).
Your developer will offer a window, or a ‘longstop date’, by which time the property should be ready for you to move into. In the event that you have not received the notice to complete within this timeframe or by this set date, you will have the right to terminate the contract and have your 10% deposit returned to you.
Completion on notice can sometimes mean months between an exchange of contracts and completion date and you will still be required to pay your 10% deposit at the point of exchange.
You should be mindful of your mortgage offer and whether it will still be valid at the time of completion. If there has been a change in your personal circumstances or the financial market then your lender may not grant another offer on the same terms. You would still be bound by the contract to purchase the property on completion and so you should consider other options for finance should this occur.
For more information on completion on notice or to find out how we can help you, please contact 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.