Once a contract has been exchanged....?

supermumno1

Please can someone advise us what is the situation after a contract has been exchanged. We have verbally agreed an open completion date of up to 6 months with the vendor but our solicitor today told my husband that we would be better off waiting until near the completion to sign anything. We want them tied into the deal somehow but the solicitor said basically that exchange ties us in to tune of 10% of the purchase price, but does not tie in the vendor - they would simply have to refund our deposit. This sounds very strange to me that one party can stand to lose so much more than the other party. Would the vendor be liable for our solicitor costs and survey fees as well as the deposit? Would they be liable to further compensate us in any way?
The reason I am concerned is that they did try to pull out on us once already. We are pretty sure it was a knee jerk reaction after they lost out on a property they thought they had secured, but after further discussion with them and the agreement to let them have more time to find a property they like (which suits us just fine to wait) they were very keen to keep us as buyers. We want them to be tied to some sort of time limit on this however as we are not prepared to sit here forever waiting. Surely though if at the end of the 6 months they have not found a property if our solicitor is correct then they have nothing to lose by just pulling out on us anyway.

Thanks

Nenen

I'd love to know the answer to this one if there are any experts out there!

silvercar

I don't understand your contract. Surely it states that the have to complete on a date to be agreed or by XX date at the latest?

If they failed to complete, wouldn't you then take them to court and ask for an eviction order. This is what my solicitor told me when I said I thought they were reluctant sellers.

supermumno1

Well that is what we believe the contract will say yes. But according to our solicitor there is nothing to stop them just backing out of the deal and only having to refund our deposit to us. At least that is the way DH understood it from her.

If the final date for completion does come about and they dont move then if they have not accepted the rest of the payment presumably the house is not then ours to evict them from?

Please, anyone with legal knowledge there can set me straight on this?

spunkeyrich

verbally agreed? sounds fishy to me.

you need an 'on or before date' inserted into the contract i think. i think you can charge 2 per cent above base rate for non completion.

ill add a bit more later.


rich

benood

Your situation sounds similar to ours a while ago - we were buying a house but hadn't sold our own, and to cut a long story short we had a year to complete at our option after exchange - we had to give a month's notice to move.

I guess that your contract will be a bit like that - parties to agree a completion date at some point not later than 6 months hence. You must have them bound into the contract in the normal way - you can then sue them for specific performance if they don't complete - I don't really understand why your solicitor is holding off, after all you can't tie them in any better than exchanging now.

Willapp_2

benood wrote:

...you can then sue them for specific performance if they don't complete...

What does this actually mean though? What the OP is suggesting is that, after exchange if the *buyer* pulls out then they are liable to pay in full 10% of the purchase price (typically the deposit amount).

However, they're saying that if the *seller* pulls out after exchange, they are only liable to pay back the 10% deposit given at exchange so the seller doesn't really lose anything! Is this correct? If not, what 'punisment' is available to the buyer if their seller pulls out after exchange? Can the seller be legally forced to complete, or what financial penalties must they face for failure to complete?

MJMum

If vendors refuse to complete, then you can take them to court for breach of contract. They could then either be forced to complete or pay substantial damages to the buyers (refund deposit, plus interest, plus amount to cover any rise in house prices for them to buy something else, money for the inconvenience, plus accomodation and extra removal/storage costs if they were in a chain and subsequently became homeless, etc, etc). It's definitely not "just refund the deposit". Usually you would get to force them to complete.

olly300

MJMum is right.

Check the shelter website http://england.shelter.org.uk/advice/advice-4191.cfm or contact the CAB if you think your solicitor is giving confusing/incorrect advice. Unfortunately it does happen that solicitors' confuse people or have not understood the facts correctly before they say something.

t_hamill

Well thats certainly how it works with new builds and I presume it also holds for resales as well. Been a lot of press over here in Northern Ireland with this happening to peopler buying new builds. Steeply rising market, buyer puts down deposit, sells their own house and developer realises can make £xxx extra so refunds deposit on what they'thought' was their new house and re-markets for maybe 50k more. Poor buyers are left with no house and can't afford to buy a house similar to their previous one, crazy stuff!

silvercar

t_hamill wrote:

Well thats certainly how it works with new builds and I presume it also holds for resales as well. Been a lot of press over here in Northern Ireland with this happening to peopler buying new builds. Steeply rising market, buyer puts down deposit, sells their own house and developer realises can make £xxx extra so refunds deposit on what they'thought' was their new house and re-markets for maybe 50k more. Poor buyers are left with no house and can't afford to buy a house similar to their previous one, crazy stuff!

Are you talking about a holding deposit or the full deposit paid and contracts exchanged? very different situation legally.