Can you be forced to pay a balance?

swingaloo

I have friends who have put down a £5000 deposit to buy a lodge. There is another £120,000 outstanding and the sale of their house has fallen through. 

They want to pull out of buying the lodge and are aware the deposit is non-refundable. However, are there any circumstances where the seller can hold them to the contract and insist they pay the rest?

user1977

Depends what the contract says, in theory there could be nil deposit but still an obligation to pay the full £120,000. It's pretty commonplace to be required to cover the seller's losses beyond the deposit.

BoGoF

If they are contractually obliged to purchase then yes they could be held liable.

Aylesbury_Duck

swingaloo said:

I have friends who have put down a £5000 deposit to buy a lodge. There is another £120,000 outstanding and the sale of their house has fallen through. 

They want to pull out of buying the lodge and are aware the deposit is non-refundable. However, are there any circumstances where the seller can hold them to the contract and insist they pay the rest?

It will depend upon the contract and what they've agreed to.  At a guess I'd assume the sellers have an obligation to minimise their loss, so in the worst case where the next best offer was £10k less, that would be the extent of your friends' liability.

Surely they're best speaking to their conveyancing solicitor?

ArbitraryRandom

I'm going to start by saying no... ish... (because you asked 'any circumstances')

They can't be forced to buy, but depending on the contract that was signed, it could be your friends are liable for the seller's costs (your friend can argue anything like remarketing etc should be covered by the deposit)

It would not be unreasonable for a seller (of a house) suing a buyer for the difference between their agreed price and the eventual sale price when it was more than the deposit - and to claim their excess legal fees resulting from the breach of contract. 

I would recommend they talk to their solicitor in the first instance as it may be more sensible to see if they can agree for the seller to accept a new completion date and hope a new buyer for their house comes along to repair the chain. 

eddddy

When you say "lodge" do you mean a holiday lodge in a holiday park? 

Or do you mean more of a conventional property purchase?

Either way you need to read the contract. In theory the £5k could just be a reservation fee, which doesn't commit your friends to buy.  Or it could be a deposit for a contract which does commit your friends.

If it's a new holiday lodge, is it being manufactured to order, ready to be transported to your friends' chosen site?


If your friends are committed to buy, backing out would probably mean they have to cover the seller's losses. If it's a holiday lodge, and the best price they can get for it is £100k - your friends might have to cover the £20k loss, plus the costs of finding another buyer, etc.

user1977

Aylesbury_Duck said:

swingaloo said:

I have friends who have put down a £5000 deposit to buy a lodge. There is another £120,000 outstanding and the sale of their house has fallen through. 

They want to pull out of buying the lodge and are aware the deposit is non-refundable. However, are there any circumstances where the seller can hold them to the contract and insist they pay the rest?

Surely they're best speaking to their conveyancing solicitor?

I'm going to stick my neck out and guess that this "lodge" didn't involve the buyers having legal representation. Or apparently even reading the contract...

lincroft1710

As the OP used the word "lodge" I am wondering if this is a transportable holiday or park home rather than a "bricks and mortar" home. If it is a park/holiday home then it is a "chattel".and may not be subject to the normal house building contract. However, whatever the contract, as others have said it should be examined thoroughly

ArbitraryRandom

user1977 said:

Aylesbury_Duck said:

swingaloo said:

I have friends who have put down a £5000 deposit to buy a lodge. There is another £120,000 outstanding and the sale of their house has fallen through. 

They want to pull out of buying the lodge and are aware the deposit is non-refundable. However, are there any circumstances where the seller can hold them to the contract and insist they pay the rest?

Surely they're best speaking to their conveyancing solicitor?

I'm going to stick my neck out and guess that this "lodge" didn't involve the buyers having legal representation. Or apparently even reading the contract...

They said the reason for backing out was the sale of their house falling through... so I was assuming they had a solicitor for at least that transaction (especially given depending on if that transaction fell through after exchange then it's possible some of the costs could travel down to their former buyer). 

Aylesbury_Duck

user1977 said:

Aylesbury_Duck said:

swingaloo said:

I have friends who have put down a £5000 deposit to buy a lodge. There is another £120,000 outstanding and the sale of their house has fallen through. 

They want to pull out of buying the lodge and are aware the deposit is non-refundable. However, are there any circumstances where the seller can hold them to the contract and insist they pay the rest?

Surely they're best speaking to their conveyancing solicitor?

I'm going to stick my neck out and guess that this "lodge" didn't involve the buyers having legal representation. Or apparently even reading the contract...

I suspect you're right, but presumably OP's friends are/were using a conveyancing solicitor for the sale of their house, so they could ask their advice.  It will probably be chargeable, but with the £5k already involved and the chance that more is at stake, it would be money well spent.

eskbanker

swingaloo said:

Can you be forced to pay a balance?

Short answer in a literal sense is 'no', but of course it's not as simple as that!

Are they contractually liable to pay the balance?  Quite possibly, depends on Ts & Cs.

Are those Ts & Cs fair and legal?  Not necessarily, given requirement to recognise actual losses.

Could the company pursue them for the debt in court?  Yes.

Is that the same as being forced to pay?  Not really, but failing to comply with court orders can get messy....