Vendors backing out after exchange of contracts?

silvercar

hamblettamaud wrote: »

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.

Your solicitor will phone you and ask you to confirm that you want to exchange, then phone calls go up the chain and back down confirming that everyone has agreed. The solicitor then phones you back to tell you that exchange has taken place. That is the theroy, in practice it can take hours to get hold of everyone.

Debt_Free_Chick

SC is right - essentially it's a legal process which the solicitors handle. However, your own solicitor will either ask you to confirm or tell you that contracts are to be exchanged. If you want to backout or hold off, THAT is the time to say so

Doozergirl

Richard_Webster wrote: »

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!

fantastic! You'd think it would be something unavoidable!

What happened in those cases? Are you allowed to tell?

hostman

In our contract the penalty for the seller puling out of the contract after exchange was 8% of the purchase price. So it would have been almost £10k to pay if the deal fell through with them to blame.

doglet

I wonder if someone can offer their opinion to help me. We are in a position where we are paying the vendor of a property £10K to secure the property which will paid upon exchange as we've been looking for a long time and mortgage offer due to expire. We are now concerned that if the vendor backs out after exchange we would not be able to recupe this money back....should we be concerned?

Richard_Webster

fantastic! You'd think it would be something unavoidable!

What happened in those cases? Are you allowed to tell?

Long sagas - first one part of a Chancery case that ran from 1958-75. Five brothers and sisters owned a "farm" - actually a glorified farmyard and one brother occupied it and let it out to all sorts of folk doing car repairs etc and set savage dogs on anyone who went near. Other siblings wanted their share of the sale proceeds but fifth wouldn't sell. Eventually we thought we persuaded him to agree to sell at an auction and he still wouldn't vacate even after the auction - our clients got sued for specific performance. I think eventually he did give in and clear the place so the sale could go ahead.

Second more recent. Clients buying an ordinary house. Seller was in arrears with his mortgage and lender about to repossess. Seller had been made redundant by his employers a year or so before and stopped paying the mortgage. He was then re-employed almost straightaway doing virtually the same job by another similar company and told they wanted him to move to another location. He didn't restart his mortgage payments though!

By the time my clients were about to exchange his solicitor had to go to court to get a stay on the basis that contracts were going to be exchanged. He harboured the hope that he could move to another location and a particular lender (mainstream one) would give him a mortgage to do this. His solicitor told him that if he exchanged he would have to leave on the completion date whatever happened and we agreed to have a 6 week period between exchange and completion so he had some hope of completing his hoped for purchase. His solicitors said that they understood from the lender that the mortgage application was going through. I found that difficult to believe but the other solicitor assured me this was the case.

Day of completion arrives and he goes off to work as usual without a care in the world. When eventually tackled he said he would not move until he could proceed on this purchase. I had to advise my clients that if they spent money going to court to force completion the lender could step in half way through and repossess and then he couldn't sell to my clients and it would all be wasted. My clients were not selling anything so they were prepared to wait. Eventually the lender tumbled to the fact that he was in arrears with his present mortgage and refused to lend so clients just got the deposit back with a minimal amount of interest and walked away.

Satisfy your curiosity, Doozer?

Ian_W

doglet wrote: »

I wonder if someone can offer their opinion to help me. We are in a position where we are paying the vendor of a property £10K to secure the property which will paid upon exchange as we've been looking for a long time and mortgage offer due to expire. We are now concerned that if the vendor backs out after exchange we would not be able to recupe this money back....should we be concerned?

There is a recent HUGE thread entitled something like "Vendor pulls out after exchange" by welshwoofs if you want to search for it. However, the outcome was IIRC that after about 2 months the vendors ended up paying £30K in damages, the buyers and their own legal costs plus their estate agents fees. Probably little change out of £50K! :eek:

However, to cover your concerns - you always have to pay a deposit as purchaser on exchange of contracts, usually it's 10% of the purchase price. This is held by the vendors solicitor who cannot pass it on to the vendors, under solicitors rules, until completion takes place. Perhaps Richard Webster could confirm this is correct and the vendors solicitor would be liable if the deposit were passed on?

If you are agreeing to pay £10K direct to the vendor, speak to your solicitor about it, I'm sure it would be a NO, NO, because if they did pull out after exchange it would be much more difficult to recover.

Mridul

Hi

I was supposed to complete the purchase of my property today and the contracts had been exchanged a few weeks back. It seems that the seller does not want to go through with the sale anymore. My lawyer tells me that this is a breach of contract and i can go to the court to either force the sale (specific performance) or claim damages. Does anyone know how long it takes to go through the courts and what damanges i can claim?

Mridul

ILW

Mridul wrote: »

Hi

I was supposed to complete the purchase of my property today and the contracts had been exchanged a few weeks back. It seems that the seller does not want to go through with the sale anymore. My lawyer tells me that this is a breach of contract and i can go to the court to either force the sale (specific performance) or claim damages. Does anyone know how long it takes to go through the courts and what damanges i can claim?

Mridul

Have you been given any reasons why they will not/cannot complete?

Hopejack

Mridul - I think you would be wise to check out the Welshwoofs thread that is mentioned above as it's fairly recent and is HUGE so talks you through the issues she had (her seller decided they weren't moving after exchange!). It took a lot of solicitor's letters etc but in the end, they agreed to settle out of court. You may be able to PM her too and ask her about her sols fees etc - she might be willing to let you know what it cost them.

I think (and may be wrong) that for specific performance to be granted, you have to be able to prove that the property was unique to you in some way, ie you couldn't go and buy exact same 3 doors down/round the corner. The reason welshwoofs was pretty sure she'd be granted this was because the house was in a village and was pretty unique - no others for sale with bedrooms etc that were required so there was conclusive proof really.

Hope you get it sorted - essentially your vendor is being v silly if they've exchanged - they could potentially lose everything. Welshwoofs post (due to well wishers etc!) ended up being pages and pages long but well worth reading.