Mortgage Co. want guarantee for damp found - who pays?

[Extra 300 Driver]

We are in the process of moving, and have just had our mortgage and structural survey carried out. They have both identified damp below the sole plate on the 300 year old cottage we are looking at. The mortgage co. have said that it needs to be fixed, with a guarantee, before they will lend us the full amount.

Unfortunately our mortgage advisor is next to useless, we can never get hold of him and he’s always out of the office in meetings, so we have not had the opportunity to discuss anything with him yet. Anyway, should this work be carried out by ourselves, or should it be paid for by the vendor? The quick and cheap way is to chemically treat it, but we have been warned off this by a number of people. The best, and most permanent is to remove the plaster and rendering and carryout an inspection and allow it to dry out.

So in normal situations, should we pay for this? I assume not as the vendor could still pull the house, after its been fixed, with no recourse?
Any thoughts?

[Sarnie]

What you are referring to is called a 'retention'.

The lender will be 'retaining' a certain amount of money due to the damp issue. Ordinarily you can still complete the mortgage and the transaction but the lender will withhold the figure specified by the retention. You could then get the work done, have it inspected by a PCA approved guy and the lender would release the extra funds back to you.

However, if you do the above you run the risk of big issues occurring once the work is started and the cost/damage being more than you expected.

Has your structural survey specified a repair cost or just noted the Damp issue?

The vendor is going to have this issue whether you buy this property or somebody else does, therefore it would be best for all parties if he rectified the issue, at his cost. Once the work is completed, you'd need to get a PCA approved person to inspect the work to be able to provide the lender with a report so that they can remove the retention.

The vendor may be reluctant to spend the money but remember, the issue is HIS and a property HE is selling. You don't have to buy this property, you can move on, he can't.......

[Extra 300 Driver]

Thanks for that, that's great. My only concern is he des a quick and cheap repair, but I expect the independent expert will sort that out for us

[Sarnie]

Extra 300 Driver said:

Thanks for that, that's great. My only concern is he des a quick and cheap repair, but I expect the independent expert will sort that out for us

It's swings and roundabouts really.

If he does it, he's likely to mitigate his costs and do just enough to be adequate.
You do it and you take on the cost and the risk of unearthing further problems.

First thing to do is to get a PCA approved Damp Specialist in to assess the damage. Ask the Estate Agent, they will usually know a local one.

See what his report says, the recommended remedial work and obviously the cost.

The vendor will then need to decide if he gets the work done or pulls out of the sale. If he gets the work done, get the same PCA Damp guy to go back and re-inspect the property. If they sign it off then happy days and the mortgage company should lift the retention.

[Mousem40]

I don't know what the market is like in that area, but if it's booming, the vendor might tell you to jump.
He can patch it up very easily and cheaply for the next buyer in the queue who won't hassle him with quotes, work, delays, and you might even then pull out anyway.

Depending on now much you want the property, market conditions, desperation of vendor etc, it might be worth getting a quote and seeing if he's willing to pay. If not perhaps ask for a corresponding drop in price and get it bought, then get the works. Or just take it on the chin and get a lower mortgage.

[HenryJM]

Mousem40 said:

Or just take it on the chin and get a lower mortgage.

Be careful, I did that in a situation pretty identical to this and the offer came back at the lower value still with a retention on that.

I accepted the original offer and then forgot about it, the house was 250 years old and it was fine, all a fuss about nothing.

[456mgt]

HenryJM said:

I accepted the original offer and then forgot about it, the house was 250 years old and it was fine, all a fuss about nothing.

This is usually the case with old houses; you can't judge them by modern building standards and unless it's in imminent danger of falling down it's probably fine leaving it the fk alone. My structural survey identified some (invisible) damp walls was due to the tanking being an old hygroscopic material and recommended that it was stripped off and replaced. It's an horrific, costly job, and I was finding grit everywhere (inside cupboards etc) for months afterwards. Wish I hadn't done it. The house has been there for hundreds of years and will still be there when you're long gone.