"Exclusivity Agreement" - Your Thoughts?

courtjester

Are you sure you've got your 'buyer' and 'seller' the right way round in your post, as what you say doesn't make much sense...?

(1) the agreement must be drawn up and negotiated via your solicitors otherwise it is likely to be unenforceable.

(2) if you aren't happy with the exclusivity agreement, decline it - your offer still stands and you can still proceed without it, you just don't have any certainty until you get to exchange. You can't force the vendor to give you exclusivity, but I am rather confused as to why the vendor should be insisting on giving you exclusivity if you haven't asked for it...!!?

themag

Hi courtjester, yes I got them the wrong way round, apologies for any confusion! This guy refuses to use his solicitor to draw up this agreement and yet insists on having it - I have told him that we are not willing to deal with him personally and he has replied saying he now has a higher offer from another buyer anyway! I've told him to go take a long walk off a short plank - I'm afraid he is some self deluded fool who mistakenly believes himself to be some property hot shot/legal eagle. It's a shame as it is a great property....

Doozergirl

He must be trying it on. Won't use a solicitor for a highly unusual agreement, is able to back out of his own exclusivity agreement for whatever reason and suddenly has a higher offer (presumably willing to sing his highly dubious document?). I doubt it.

I'm fine with the principle, but only after survey. It's impossible to say what type of survey result would be resonable a for a buyer to withdraw from the purchase Different people have different standards and many FTBs interpret surveys as being far worse than they are.

courtjester

Of course, if our property laws weren't so archaic, this type of agreement and the usual nonsense that goes on wouldn't be necessary.

UK HIPS won't improve this one jot.

The Danes have a great system whereby their law makes the vendor responsible for hidden defects in the property for 20 years after the sale - that's a 20 year defects guarantee! No buyer-beware silliness there.

To deal with this, vendors can voluntarily offer a full HIP, which includes a technical report on the structure (survey) backed by an insurance policy covering any defects not highlighted in the report. That's all available at the time of viewings so buyers know exactly where they stand AND have protection against anything the survey doesn't report on.

Needless to say, every house sold in Denmark comes with a HIP (even though they are *not* compulsory) and every buyer and lender is satisfied with the pack content and assurances this provides.

Why is it in the UK that we put up with such bad systems and dodgy services (agents) for handling our most expensive assets?

theGrinch

holding deposits are on the increase. a friend has been asked to put one down on a 1 bed flat. this is the second time he has been asked in 2 years. what tends to happen, is once the process gets underway, the deposit is forgotten

plane_boy2000

I wonder if this is a bit of a con trick i.e. the bloke "sells" his flat 2 or 3 times a year obtaining his £1K fee, and then pulls out down the line pocketing the money..........

Would also tie in with him not using an estate agent as they would not continue to market properties for him after he pulled this stunt once.....

I also imagine that the second higher offer was fictitious in the hopw you would agree straight away........

mrtwis

In contrast to most of the replies on this post, I agree with the OP's seller and with what I believe he is trying to achieve. I have been trying to do similar in that I would like to take a "pre-contract" deposit from my latest prospective buyer and have us enter into some sort of exclusivity agreement.

My situation is as follows:
I listed my 1 bed flat for sale with a local EA in Feb and agreed the sale at the asking price to a buyer who looked like he had his things in order. By April, the buyer was dragging his feet as he didn't like certain things about the lease (despite it all being there in the HIP from day 1), finally pulling out in early May.
I agreed the sale (again at the asking price) with a second buyer in mid-May who also seemed to have things in order. Her situation required the sale of another flat of hers which was set for end of July. By mid July it was revealed that said sale wasn't happening and its unknown if she'll have financing to buy mine anytime in the near future.
My latest prospective buyer has offered slightly more than the asking price but is in a probate situation whereby it's at least 2-3 months or so before there's certainty that he'll have his finances in place.

As far as I'm concerned I'd happily agree the sale to this latest buyer but have no interest in bearing his risk. A solution that would make sense to me therefore is to get some sort of exclusivity agreement, and most importantly, a deposit from him. In principle, he is agreeable to it. Making it happen however, is proving to be ridiculously difficult.

I figured there'd be three ways to do it:
1) Through our lawyers
2) Through my estate agent
3) Directly

1- My lawyer basically wants nothing to do with it. He advises purchasers he represents not to enter any such agreement full stop. With sellers (such as me) he says that getting such an exclusivity arrangement agreed takes about as much time as it does to do the 'regular' conveyancing activities and which he would charge separately (by the hour) for. Other lawyers I've talked to about it seem to say much the same. I've heard that there are supposedly lawyers who have some sort of 'standard' exclusivity agreement available at a fixed price however have not been able to find them if they do actually exist.

2- My EA has little interest in helping with this either and is basically saying if I want to do it then it should be done by my lawyer. Supposedly my EA did do this sort of thing a few years ago but no longer does. At that time they had client accounts set up to hold the deposits. Why things changed such that they stopped I don't understand but after a couple weeks of them making excuses it seems clear that I can't count on much from them.

3- I'd happily do such an arrangement directly but my buyer's lawyer is advising him not to.


All in all, I'm flummoxed as to why such a simple, common-sense agreement is proving to be so difficult to achieve. We're basically agreed now on the sale of my place but I'm faced with waiting months before I can see any true commitment from him even though he's willing to show it (we've talked about a 2k deposit). I don't care to be bothered with the continued marketing of it, particularly when I don't believe that my EA will be doing much.

Given the comments on this and other threads, it would seem that I'm an oddball/twit/nutter for even thinking that I could get such an agreement in place before I 'officially' accept my new buyer's offer. However, should there be fellow moneysavers (such as courtjester) who understand where I'm coming from and could offer any advice I'd appreciate it.

Specifically, I'd be interested in hearing any advice on trying for the following agreement (directly with my new buyer). I appreciate it may be simplistic, but if he's serious I would think he'd be willing to put up something.

---

Buyer = ____________ <-Buyer's Name
Seller = ____________ <-Seller's Name

Received: GBP __(Amount)__ from Buyer as payment towards the purchase of __(Address)__ for __(agreed price)_.
Fully refundable in the event that Seller does not proceed with the sale to Buyer at agreed price. Otherwise refundable at Seller's discretion.

Seller agrees to cease marketing of said property and to not provide conveyancing documentation to any other interested parties for __(number eg 60)__ days from the date of this agreement.


(Seller's signature) (Date)
____________________ ____________________
(Seller)

---

Thanks!

Arthritic_Toe

Otherwise refundable at Seller's discretion

So you give it back if you feel like it. Absolutely no conditions specified under which the buyer gets his deposit back (unless seller withdraws). What if survey reveals its got subsidence? No buyer in their right mind would sign this.

madeupname1

OP - You don't have to agree. If you can move quickly you may be willing to take the risk that someone else might come along in the meantime and put in a better offer.

If you don't mind the idea of an exclusivity, but just don't like the terms he has suggested, amend the document (or get your solicitor to) so that it includes terms that you do find acceptable. That could be quite tricky though and you may end up spending longer negotiating the exclusivity agreement than it would take to purchase the house!

If you do go down this route I think the key points are to make sure that the deposit is refundable in certain circumstances - e.g. buyer pulls out; survey shows significant problems; house sale is completed (i.e. £1,000 should be applied against the purchase price) etc etc. I would also suggest that the £1,000 shoudn't go directly to seller but should be held by a mutually acceptable party, e.g. by a solicitor, so that if he doesn't stick with his side of the bargain you can get the money back from a solicitor rather than him. Perhaps you could even have a reciprocal arrangement so that he also has a financial stake in the sale going through with you.

rosyw

I am in the process of selling my place to a firm of developers, in return for exclusivity for a fixed period, I have been paid a "non refundable fee", this is NOT a deposit, it is being paid on top of the agreed price for the property. For me this gives me a bit of peace of mind, I know they are serious about buying and also that if they do pull out I have a few grand in the bank which I would not otherwise have had. A very simple agreement was drawn up by the buyers solicitors, checked by mine and then signed by both parties. My solicitor and EA were not happy with the arrangement as they both felt that the agreement gave the buyers the option to back out, but the way things are at the moment I took the view that ANY buyer can back out, so I may as well be paid for wasting my time!