26. Related transactions

When selling a property, certain transactions such as the sale being dependent on a purchase or remortgage can significantly affect the process. Understanding these dependencies and their impacts is crucial for a smooth transaction. 

Sale dependent on purchase 

A sale dependent on a purchase occurs when the sale of your current property is contingent upon you buying another property. This situation often arises when homeowners need the proceeds from their current property sale to fund the purchase of a new home. 

Impact on property sale 

• Property chain: This creates a property chain, where multiple transactions are interlinked. Each transaction in the chain depends on the successful completion of the preceding one. 
• Increased complexity: The process becomes more complex as delays in one transaction can affect the entire chain. For example, if your purchase is delayed, it can stall the sale of your current property, impacting other buyers and sellers involved. 
• Timing issues: Coordinating the timing of both the sale and purchase can be challenging. Ensuring that move-out and move-in dates align requires careful planning and often some flexibility. 
• Potential for collapses: Chains are susceptible to collapse if one party withdraws or encounters financing issues, leading to potential delays or the need to start the process anew. 

Sale dependent on remortgage 

A sale dependent on a remortgage occurs when the seller needs to remortgage their property to release equity or settle outstanding mortgage balances before completing the sale. 

Impact on property sale 

• Financial arrangements: The seller must arrange for the remortgage to be completed before or simultaneously with the sale. This requires coordinating with lenders and ensuring all paperwork is in order. 
• Early repayment charges: If there are early repayment charges associated with the current mortgage, these need to be accounted for, as they can affect the net proceeds from the sale. 
• Risk of delays: Delays in the remortgage process can hold up the sale. Issues with obtaining approval or processing the remortgage could push back the sale closing date. 
• Impact on buyer: Buyers need assurance that the seller’s financial arrangements will not jeopardise the sale. Clear communication and transparency about the remortgage status are crucial to maintaining buyer confidence. 

Property chains 

A property chain is a sequence of linked transactions where each sale depends on the completion of another sale or purchase. Chains are common in real estate markets and can involve multiple parties, from first-time buyers to those selling and buying properties simultaneously. 

Key points about property chains 

• Dependencies: Each party in the chain relies on the successful transaction of the previous party. A delay or issue in one link can impact the entire chain. 
• Communication: Effective communication between all parties (buyers, sellers, estate agents, and solicitors) is essential to manage the process smoothly. 
• Flexibility: Flexibility in terms of dates and arrangements can help mitigate some of the challenges posed by chains. For instance, sellers might consider temporary accommodation if their purchase is delayed. 
• Contingency planning: Having contingency plans, such as temporary housing options or financial buffers, can help manage unexpected delays or issues within the chain.