Why no law to prevent buyers pulling out

jigsaw21

I’m not the first and won’t be the last but why is there no law to stop people doing this. We’re relocating to the lakes with family. Our property stc in early March. Our house was at exchange stage just waiting for our purchase to catch up. Yesterday our buyers pulled with very little reason. They’ve paid for searches, survey, solicitor and now pulled the plug. Leaving us very little time to sell and complete. 

Why isn’t there law to ensure a non refundable deposit is taken at the first stage? Pretty much every other large item you buy stipulates this. Legislation needs to be put in place to avoid this. Why does no party or politician ever raise it. Or will it continue to be an absolute ****show for every person who decides to enter the process. 

Ad you can tell I’m feeling quite raw about it today.

Martico

Tough break for you, I can understand the upset.
But placing a deposit before all the due diligence is done wouldn't be feasible. 
Hence contract exchange being the time that things get legal 

DullGreyGuy

jigsaw21 said:

I’m not the first and won’t be the last but why is there no law to stop people doing this. We’re relocating to the lakes with family. Our property stc in early March. Our house was at exchange stage just waiting for our purchase to catch up. Yesterday our buyers pulled with very little reason. They’ve paid for searches, survey, solicitor and now pulled the plug. Leaving us very little time to sell and complete. 

Why isn’t there law to ensure a non refundable deposit is taken at the first stage? Pretty much every other large item you buy stipulates this. Legislation needs to be put in place to avoid this. Why does no party or politician ever raise it. Or will it continue to be an absolute ****show for every person who decides to enter the process. 

Ad you can tell I’m feeling quite raw about it today.

You can't just pull out after contracts have been exchanged, before that nothing is binding on either party. 

There is nothing to stop you requiring a pre-contract deposit but then you effectively have to have a contract to contract which will add costs to both sides whilst this agreement is negotiated. It will never be fully non-refundable as if the property has been mis-represented etc will always give grounds for a dispute but thats where it gets tied up in knots as if the homebuyer survey discovers a early signs of subsidence should the deposit be returned? Would it depend on if you had known that yourself or not? How does that get proven?.

Because of the above its not often done but one flat for sale around our area had a £2,000 bid deposit, given the nearly £9,000 service charge (average in the area is about £2,000) they may have had several pull out 

FlorayG

Isn't there some law to that effect in Scotland? That once you offer you are committed subject to satisfactory checks?
One of my friends, badly advised, arranged to exchange and complete on the same day. Her furniture was actually packed and on the way to the house she was buying when HER buyer pulled out. Cost her a lot of money to learn that lesson!

Sam_666

Have you asked that question your MP? What did he/she say?

TBG01

jigsaw21 said:

Why does no party or politician ever raise it.

I'm assuming you were championing for it even before this transaction, but why does it only become an issue when negatively impacted?

I'm also assuming, if for whatever reason you decided you could or no longer wanted to commit to a house purchase, you'd still be happy with compensating the seller x amount of pounds?

DullGreyGuy

FlorayG said:

Isn't there some law to that effect in Scotland? 

Scotland has a different legal system, all contracts are different than in England 

In principle formal offers are binding and so conditional offers are made instead, normally it's your solicitor that submits your offer. Similarly acceptance is normally qualified to start with. A binding contract is only formed after all the conditions of both have been met and the parties have agreed on things like completion date, fixtures/fittings included etc. Its therefore typically earlier than in England but isn't the Wild West of a casual conversation of "probably would pay £200k" with the estate agent binding you to make the said purchase as urban myth would suggest. 

penners324

The English housing market is stuck using law that's not fit for purpose or modern times.

Attempts were made to improve things a few years ago but were pointless.

Contact your MP if you want the whole process improved and sped up

user1977

jigsaw21 said:

Why isn’t there law to ensure a non refundable deposit is taken at the first stage? Pretty much every other large item you buy stipulates this.

What other items have a mandatory deposit?

user1977

FlorayG said:

Isn't there some law to that effect in Scotland?

Nothing to do with differences in the law (other than perhaps having Home Reports, which speeds things up to an extent), mainly just different normal practice. England could have contracts entered into at an earlier stage if people wanted.

saajan_12

The reasons are

1. If it turned out the house had a major issue from the survey / searches, then its also unfair to penalise the buyer.
   
   
2. What constitutes an issue with the property may be subjective.. so it takes time to come up with an agreement on what you expect. Instead of that it may be faster to just get on with checking those things. 
   
   
3. Also if either side wanted to pull out, they might keep stalling to make the other person eventually give up and technically pull out. This may be more painful than knowing where you stand early so you can start remarketing.
   
   
4. Ok, so then put in a time limit.. but then the seller (and the freeholder for flats) could just be slow with responding to queries, allowing surveys etc until it gets to past the time limit and score themselves a deposit. 
   
   
5. Also if the chain breaks further down, should the seller still be committed to their purchase? eg if there's a time limit after which if your buyer still failed to exchange then you kept your buyer's deposit, you may now need longer on your purchase to complete the chain below you again so you have the funds to purchase. Especially as your buyer's deposit may be smalller than your deposit on your purchase as people often upsize.