Lock out agreement

canaldumidi

Definitions!

To work, the agreement would need a full page to define each critical word! (satisfactory', structural' etc etc - and even then you could end up with arguments.

If this was easy, there would be a standard lock out agreement provided by eg the Law Society (just as they produce standard 'Enquiries' and standard 'fixtures and fittings forms', and it would be regularly used in property sales.

They don't. Hence this amateur document.

Gentoo365

I would not pay the money or sign it. I would instead explain why I am committed to the sale.  For example show evidence of paying for the searches/surveys/valuations. 

It is just as much a risk to you that they 'drop out' as th other way round and you don't get any non refundable payment from them. 

Don't say this to them, but you need to be free to walk away from the purchase at any time prior to exchange as you don't know what you are buying until the due diligence is all done. This would mean that if there were issues you would lose £2k as well as whatever you would have spent on surveys.

Two sales dropping out is a red flag.

user1977

Is the seller also paying a £2000 deposit to secure their obligations?

canaldumidi

Also worth pointing out that in a standard purchase (ie no lock out agreemnt) the buyer has much more to lose financially than the seller if it all falls through. The buyer pays for a survey. the buyer pays for searches. And a mortgage application. Buyer costs can be well over £1000, Seller's costs are £0 (or perhaps a % of their solicitor costs which the buyer has too). And the seller can just decide not to move or sell to someone else.

magicmcone

Thanks again for everyone’s advice.

Even though I found it unusual, I would never have found so many weaknesses on my own! 😅

GDB2222

canaldumidi said:

Definitions!

To work, the agreement would need a full page to define each critical word! (satisfactory', structural' etc etc - and even then you could end up with arguments.

If this was easy, there would be a standard lock out agreement provided by eg the Law Society (just as they produce standard 'Enquiries' and standard 'fixtures and fittings forms', and it would be regularly used in property sales.

They don't. Hence this amateur document.

It’s circular. There’s no demand for these documents currently, so there is no need for the Law Society to produce a standard. That, in turn, means that there is no demand.  

There clearly is interest in these documents, and standard drafts are available, although I have no idea about how good they are. Take a look here, for example. 

https://www.lexisnexis.co.uk/blog/built-environment/lock-out-agreements-exclusivity-6-key-drafting-points

steampowered

Interestingly, the agreement does say that "The Seller agrees not to talk to any other third parties for the duration of this agreement".

That does work in your favour as would stop you from being gazumped.

I might sign this if I really wanted the property. Otherwise, the best response would be to say you don't think this is normal so won't sign, but are committed to proceeding promptly and have sent the funds for searches to your solicitors - to give the seller confidence you are a serious buyer.

SiliconChip

I would be quite surprised if your solicitor allowed you to sign it without a definite instruction from you that you understand the risks.

Are the sellers doing so for the first time? I think most people who have sold at least once before would understand that things can go wrong and that's just the way it is, particularly with the English system. They've been unfortunate for it to happen twice but plenty of other people will have had the same experience without searching for such a draconian solution.

jimbog

You would also lose your £2000 if you didn't accept whatever the seller put (or did not put) on the fixtures and fitting list

steve866

Is the money being sent to the estate agent to hold? Is the market still heated in your area?