Q. My husband and I and in the process of buying a site with my mother. The idea is that we would build a home with a separate flat for her. She has a small amount of savings, and we hope to fund the bulk of the site purchase and build, with the property in our name. The purchase was always subject to planning permission. The permission was granted, but the flat was removed. Really, we would not be able to manage this without my mother. We have not received a letter of loan offer, but have received a letter from the bank approving the loan in principle, on the basis that we were building a house and granny flat. The solicitor for the vendor says that we must proceed, regardless of the conditions. Is this correct?
Dear Reader,
This can be a somewhat difficult question to answer without knowing the precise wording of the particular clause in your contract for sale. Sometimes these clauses can be quite basic, i.e. “The Sale shall proceed if Planning Permission is granted to the Purchaser within twelve months”. Unfortunately, if the clause is that basic then it is quite possible that you are bound contractually to purchase the site as a permission has issued.
Vendors can issue proceedings for what is termed “specific performance”, i.e. seeking to compel you to progress with the purchase of the site.
Often, however, the ‘subject to planning’ clauses in contracts are more detailed – containing timelines and an averment that any planning granted must be ‘satisfactory to the purchaser’.
Clauses of this type often allow you to step away from the contract if written notice is given to the vendor within a certain period after the planning permission is issued. The written letter to the vendor should stipulate that planning is not satisfactory because the flat was removed.
There may be other clauses in the contract that would be of assistance. Often, the purchase is subject to a loan offer issuing to allow you buy the site and construct your home. If the construction of the property is unviable, then it is likely your bank would not issue a loan offer, thereby allowing you to step away from the contract.
I understand that the bank have in principle agreed, but if the terms of the property to be mortgaged change, then the bank are not bound to issue the offer.
You should check with your own solicitor to ascertain precisely what the position is.
It is possible that, rather than get involved in lengthy and costly litigation, the vendors may be satisfied to accept a smaller sum now to draw a line under matters. You should remain in close contact with your solicitor.
