Vendors backing out after exchange of contracts?

Legacy_user

I am aware that if buyers back out after exchange they forfeit the deposit.

But what about if the vendors back out, what do they have to lose? How easy is it? What are the chances of it happening?

QTPie

candyflossing wrote: »

I am aware that if buyers back out after exchange they forfeit the deposit.

But what about if the vendors back out, what do they have to lose? How easy is it? What are the chances of it happening?

Assuming they are selling through an estate agent, then something like "25% of the commission" (that is what is on my contract anyway). So on a £200k house with a commission of 1.5%, £750 + VAT (£862.50). PLUS Solicitor's fees for "work done" (which will depend on what stage they pull out). So in the region of £1100 if pulling out BEFORE exchange of contracts.

Not sure about AFTER exchange of contracts.

QT

astreix

If the sellers backs out after exchanging of contract I think you can apply to the court forcing the seller to complete, or you can ask for your deposit back, cancel the contract and sue the seller for breach of contract. Your solicitor/conveyancer should be able to give you more details on this.

amz84uk

Once the Contracts are Exchanged, the deal has been done, but you just have the final Completion Date to work towards, which is the date you move into the property, and the vendor must vacate.

If the vendor refuses to vacate, you can sue them for Breach of Contract, and charge them for hotel expenditure, etc, etc. The property is legally yours from the Completion Date, so they must vacate. Your solicitor should be able to do everything for you, and file for compensation.

Also, the funds are not transferred to the vendors account if they fail to vacate the Property, so any compensation that you claim is deducted from the property value you purchased for (I think that's how it goes).

Good luck, although you won't need it, as it's all legal once Exchanged Contracts.

hamblettamaud

as far as i understand it, the sale is only complete once both parties have signed contracts. if you are at this stage then the seller CANNOT back out and you will be justified in taking legal action.

Robert_Sterling_3

They CAN pull out. This would mean they had broken the contract. You could make a claim against the vendor.

The vendor may or may not be able to pay your claim.

Richard_Webster

Robert_Sterling wrote: »

They CAN pull out. This would mean they had broken the contract. You could make a claim against the vendor.

The vendor may or may not be able to pay your claim.

True the Vendor might not be able to pay a money claim - but you could apply for "Specific performance" of the contract, i.e. for the seller to be forced to complete the sale. Eventually if he does not do so then the court will order the execution of the transfer deed by somebody else on the seller's behalf. Seller would be ordered to pay costs, but of course if you can't get hold of him, or he hasn't any assets such an order may be a waste of time.

Really depends on how much you want the property - may be better simply to get your deposit back aand buy another (now cheaper) property.

Debt_Free_Chick

hamblettamaud wrote: »

as far as i understand it, the sale is only complete once both parties have signed contracts. if you are at this stage then the seller CANNOT back out and you will be justified in taking legal action.

This may seem picky, but just in case someone relies on this in the future ...

The contracts are signed and then exchanged - the contract is only legally binding once exchange has taken place. There can be days or weeks between signing and exchange, so it's exchange that's important - not signing.

And - either party can "back out" after exchange, but this would amount to a breach of contract and - as you point out - legal remedies are available for the breach.

silvercar

Only logical reason I can think of a contract not to be honoured after exchange is if the vendor dies or the property is repossessed.

Richard_Webster

Only logical reason I can think of a contract not to be honoured after exchange is if the vendor dies or the property is repossessed.

I agree, but...

Two cases that I have known in 39 years in the law where the transactions were not completed the problem was that the seller simply was not behaving rationally and nobody could get sense through to him!

hamblettamaud

Debt_Free_Chick wrote: »

This may seem picky, but just in case someone relies on this in the future ...

The contracts are signed and then exchanged - the contract is only legally binding once exchange has taken place. There can be days or weeks between signing and exchange, so it's exchange that's important - not signing.

And - either party can "back out" after exchange, but this would amount to a breach of contract and - as you point out - legal remedies are available for the breach.

debt-free-chick (or anyone), can you be even more picky, please. is there a legally defined moment when contracts have been exchanged? e.g. can i say to my solicitor, "when the other contract arrives don't accept it!" or can i phone the solicitor of the other party and tell them, "i've changed my mind. please don't accept my contract."

just curious about the point at which the exchange of contracts happens and cannot un-happen.