Unless the buyer is a first-time buyer, the buyer of your home is likely also selling their own property at the same time. This loop is known as a property chain, and if any one link breaks, the entire chain could collapse.
Whether you’re buying or selling a property, it’s disappointing when a sale falls through, especially if you’re a link in the chain. One in three sales do not materialise, but this occurs more frequently than you may imagine. If the sale of your house fell through, you might be wondering what to do next and whether you’re entitled to compensation. To help you through this stressful circumstance, we have put together this article.
When is it possible to back out of a property sale?
Before contracts are exchanged, which might happen four months after your offer was approved, both buyers and sellers are free to back out of the sale of a home. The sale is “subject to contract” until then, even if both parties agree.
Why do purchasers renege on a deal?
There are a number of potential causes for this. It could occur as a result of the buyer changing their mind or a mortgage offer failing to materialize. There are countless examples, but one thing is certain: you will need to pay a price for it in the end. The property could need to be remarketed, and you might not get the same profit as when you first sold it. It can be very upsetting, especially if there were additional potential bidders when the home was initially advertised. Therefore, what options do you have if a buyer backs out of a house sale?
What are your rights?
You can lose more money than you anticipated if buyers pull out of the sale and you have to lower your price to locate another buyer. Whether you exchanged contracts with the initial buyer determines whether you have rights or not. Unfortunately, you cannot sue the initial buyer for your loss if you didn’t have a contract. However, if you signed exchange agreements with the initial buyer, these become legally enforceable, and you may be able to hold them accountable for your losses in accordance with the terms of your contract.
The purchase price is typically required to be paid on a specific day, which is typically the completion date, and failure to do so constitutes a contract violation. You have the right to request interest on the purchase price up until full payment. It is typically regarded as a breach of contract if neither paid with interest (where applicable) nor within 14 days. You have the option to end the contract at this time. You will then be permitted to recover any damages incurred as a result of the initial buyer’s failure to make the agreed-upon purchase payment.
What happens to the solicitor fees if my buyer pulls out when I’m selling the house?
Unfortunately, you still have to make the payment for the solicitor’s legal fees. However, the conveyance and sale will determine how much the attorney or estate agent will charge you based on where you are in the sale process. Buyers and sellers must follow this rule.
The best course of action in this circumstance is to swiftly get out of it by:
- reselling your property as soon as possible
- As quickly as you can, find another buyer and start the legal process.
In the event that the new buyer decides not to proceed, you could request that they leave a small deposit with your solicitor.
Future-looking: reservation agreements
The UK government is investigating ways to protect buyers and sellers financially in the event that a sale falls through. Reservation agreements are one of the possibilities being researched right now.
Buyers and sellers concur that when an offer is approved, a deposit will be paid. The deposit is returned to the other party if one party terminates the agreement without cause.
The reservation agreement is not currently a part of UK law, although being considered in Parliament and being tested in several regions of the nation. However, if you choose to do this deliberately, nothing is stopping you from doing so.
Are you thinking about selling your home? Are you planning on writing a contract for your buyer? Or do you require legal assistance with conveyancing so that you can manage the sale of your property? We have you covered, so stop looking elsewhere. Get in touch with us at 0808 169 7318