Pulling out of exchanged contracts on new build

qaws1234

Hi

I exchanged contracts on a new build property in London and want to pull out. The developer has 5% deposit. I am guessing they are entitled to another 5%, but can they sue me for more? Does anyone know a solicitor who would be able to help?

Advise urgently needed, can anyone help?

clutton_2

it depends on the terms of your contract - why not ask your solicitor that is what you pay him for ...

qaws1234

thanks for your reply.

The solicitor says they are entitled to the remaining 5% plus any additional costs or losses they incur due to this. But the solicitor was recommended back then by the developer, he is also paid by the developer as one of the incentives, so I don't know if I can trust him.

Has anyone out there been in a similar situation?

ILW

Generally you will be liable for any costs involved in re matrketing the property and if it sells for less than the price you agreed, you will be liable for the difference.
Why are you pulling out?

lincroft1710

I don't want to worry you but there was an extremely long thread from a purchaser whose vendor pulled out after exchanging contracts. It cost the contract breaking vendor a lot of money, even though he settled out of court.

I would advise you read the thread and think very, very carefully before doing something which could prove costly.

dopester

Two words: Specific Performance

qaws1234

Not sure about specific performance as I am unable to get a mortgage with the deposit I have. Few lenders I have spoken to also said that the property is likely to be overvalued, so they would not lend for the purchase price anyway. Additionally I have recently also changed jobs....so not sure how I can be forced to complete if I can't get a mortgage in the current market.

sunnysea83

Why didnt you get the mortgage offer before exchaning?

PasturesNew

Yes, it is highly likely that you will have to pay the remaining deposit -AND- any extra costs the developer has in re-marketing it -AND- the difference between what you would have paid and what the next guy pays.

e.g. £200k, you put £10k down ... you'll have to pay another £10k -AND- maybe he spends another £2k marketing it, so that's another £2k -AND- the new guy buys it for £150k so you pay another £30k.

Ultimately, most of these contracts will ensure that whatever happens the builder will end up with his £200k and no extra costs. You'd therefore be coughing up £50k plus the extra marketing costs.

ILW

sunnysea83 wrote: »

Why didnt you get the mortgage offer before exchaning?

Where did that come from?

qaws1234

I did, back then for 95% LTV (and they would have even given me 100% back then). Of course after 3 months they withdrew the offer!....this was just before the credit crunch....i was also in a "secure job" back then!

Surely I can't be the only buyer in this market wanting to pull out...