Ready Willing and Able clause

Olinda99

my parents put their house on the market and the estate agent contract included the ready, willing and Able clause 

a bit silly on their part but it doesn't really matter as they are genuine sellers and would obviously want to pay the commission anyway. however they do have a query and I wonder if anybody can help 

they have an offer on their house and have found somewhere to buy. The problem is if they accept the offer on their house and the place they are buying falls through later on (for example a bad a survey or the seller pulls out or they are gazumped or whatever) their estate agent would presumably want them to continue with the sale of their house otherwise they will want their commission under that clause.

is there a way for them to accept the offer on their house 'subject to contracts being exchanged on their purchase' which if it didn't happen would nullify the effects of this clause and their house would just go back on the market if the buyers pulled out because it was taking too long.

RHemmings

Olinda99 said:

my parents put their house on the market and the estate agent contract included the ready, willing and Able clause 

a bit silly on their part but it doesn't really matter as they are genuine sellers and would obviously want to pay the commission anyway. however they do have a query and I wonder if anybody can help 

they have an offer on their house and have found somewhere to buy. The problem is if they accept the offer on their house and the place they are buying falls through later on (for example a bad a survey or the seller pulls out or they are gazumped or whatever) their estate agent would presumably want them to continue with the sale of their house otherwise they will want their commission under that clause.

is there a way for them to accept the offer on their house 'subject to contracts being exchanged on their purchase' which if it didn't happen would nullify the effects of this clause and their house would just go back on the market if the buyers pulled out because it was taking too long.

I am not a lawyer, and this is not legal advice. But it would seem to me that for the buyer to not be ready, willing, and able, that the failure to exchange contracts must be due to the buyer withdrawing. It seems to me that you would be prepared to go all the way to near exchange, for your parents to then pull out, but somehow the ready, willing, and able buyer clause to not apply. I.e. exchange of contracts on the house your parents are selling becoming a condition on accepting an offer 

I personally do not agree with 'ready, willing, and able, buyer' clauses and would not sign a contract with such a clause in it. But, your parents have. And, given that clause exists, it seems that the scenario you describe is one where your parent's buyers are definitely ready, willing, and able, and there is significant risk that the clause will come into play. 

If your parents reject offers, e.g. at asking price, then this may already qualify as rejecting a ready, willing, and able, buyer. Legally. Note, I'm not a lawyer and this is just my personal impression as a random person on the internet. But, if it got much further along and exchange on your parent's current house gets near, then if your parents withdrew because their own purchase failed, then it seems to me that the clause will apply even more clearly. 

You can always ask, and it's not impossible that EAs would agree. But, from the EA's point of view that clause is there to protect them from being messed around with by sellers, and I can't see why they would want to excuse your parents from it.

There is always a financial risk when selling houses that a failed sale may result in financial losses. I personally think that for your parents, this now includes having to pay the EAs fee if the sale falls through not for the fault of their buyer. 

Olinda99

thank you for taking the time to respond 

The house is not on at an absolute asking price but 'guide price' so luckily my parents are free to reject any offer without danger of that clause coming in to effect

If what you are saying is true then they  cannot accept any offer on their house or make an offer on a new place in case their purchase fails for no fault of their own.

I suppose it could be written into their sale contract that exchange cannot take place without simultaneous exchange on a purchase ?

By the way if the purchase fell through my parents would not pull out from the sale. They would just not exchange until they had found another place. The buyer would probably not want to wait but would say 'we are ready willing and able'. I suppose the only defense to that would be to  say ok but completion is ... ie a long time in the future to give a chance to find somewhere else. 

A bit of a conundrum 

RHemmings

Based on a search of the internet, I found multiple different opinions about the clause coming into action if no offers are accepted by the seller, but at least one offer is considered 'suitable' in some undefined way. Some of these discussions include claims that EAs are 'trying it on'. The overall consensus online seems to be that if no offer is accepted that the clause cannot come into effect. This is not a 100% consensus. And, even if it was that doesn't guarantee what a judge or ombudsman may decide if it gets that far. 

Your parents can accept offers and make offers on new places. But, there is a financial risk including that they may have to pay the EA's fee (quite a lot) even if the transactions fall through. Have your parents signed an exclusive contract with the current EA, and how long do they need to wait until they are free from that? Have a large number of potential buyers been introduced by the current EA? (E.g. viewings). 

Olinda99 said:

I suppose it could be written into their sale contract that exchange cannot take place without simultaneous exchange on a purchase ?

By the way if the purchase fell through my parents would not pull out from the sale. They would just not exchange until they had found another place. The buyer would probably not want to wait but would say 'we are ready willing and able'. I suppose the only defense to that would be to  say ok but completion is ... ie a long time in the future to give a chance to find somewhere else. 

A bit of a conundrum 

You could try these things, but it's plausible that the EA will still claim they had a ready, willing, and able, buyer but that it was your parent's fault that exchance didn't happen on your parent's property. 

Olinda99

Thank you again for your reply.

Yes exclusive sole selling rights, 12 weeks ends in 4 weeks time.

Had a few viewings before this offer but no other offers.

They plan to ask EA to remove RWA clause before accepting any offers

It occurred to me that having this clause effectively means the English system has become more like the Scottish system in that once you accept an offer the RWA clause means you pretty much are forced to continue to sell whatever happens.

AskAsk

I had this issue with my in-laws recently.  Until then, I had never come across this clause before and I have sold a few properties in my time.

I think the clause will come into effect if your parents' purchase fell over and they abandon the whole thing and stay where they are.  If they buy another property the buyer can hang on or drop out themselves and the clause would not apply.

The agent may get fed up if your parents keep getting failed purchases and demand their money so it is very much in the EA favour and they could call on it if they want.

Yes, a good idea to re-negotiate before accepting the offer.

eddddy

In reality, it would work like this...

• 1) Your parents accept an offer to sell their current house...

• 2) Your parents have their offer accepted to purchase another house...

• 3) Your parents' purchase falls through

• 4) Your parents say to their buyers "Our purchase has fallen through, you'll have to wait while we find another property"

Then if....

• A  ) The buyers wait until your parents find another place, everything goes through, and your parents pay their estate agent as normal on completion

• B  ) The buyers don't want to wait, so they walk away - so your parents don't have to pay the estate agent a fee

• C  ) Your parents say something like "Because our purchase fell through, we're sick of this process, we're not selling anymore" (i.e. they withdraw) - then they'd have to pay the estate agent a fee

I think you're saying you're worried that the estate agent would claim a fee for option B. I've never heard of an estate agent try to do that. And I can't see the Property Ombudsman or a Court supporting the estate agent in that kind of claim.

(Unless perhaps the estate agent's contract has extra clauses, in addition to the standard 'Ready, Willing and Able' clause - which makes that crystal clear.)

Olinda99

thanks for that

yes I think option B was the one they were worried about ie they get a phone call saying your buyers are waiting to exchange - they are ready willing and Able and you have to do it now (or something like that) when they haven't found anywhere to go because their purchase has fallen through.

eddddy

The legal definition of "Ready, Willing and Able" (which is what the estate agent should be quoting in their contract) is:

“READY, WILLING AND ABLE PURCHASER

A purchaser is a “ready, willing and able” purchaser if he is prepared and is able to [exchange

unconditional contracts for the purchase of your property].

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if

such a purchaser is introduced by us in accordance with your instructions and this must be paid

even if you subsequently withdraw and [unconditional contracts for sale are not exchanged],

irrespective of your reasons.”

Link: https://www.legislation.gov.uk/uksi/1991/859/made/data.pdf

I imagine that your parents told the estate agent that they are selling to buy somewhere else.

So I would argue that the implied instructions to the estate agent would be "introduce a buyer who is willing to exchange contracts, when we are ready to exchange contracts on the property we are buying".


But if your parents had said to the estate agent something like "As soon as you find willing buyer, we will move into rented within 30 days" or "If you find a willing buyer, we will exchange contracts by 30th June" - and then they didn't - that might be a tougher argument.


But worryingly, I found a decision from 2012 where the Property Ombudsman seems to say that the seller had to pay 50% fees, when a "ready, willing and able buyer" walked away. (But there is very little background about why the ombudsman made that decision)  :   https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/ready-willing-able-case-1

BarelySentientAI

eddddy said:

The legal definition of "Ready, Willing and Able" (which is what the estate agent should be quoting in their contract) is:

“READY, WILLING AND ABLE PURCHASER

A purchaser is a “ready, willing and able” purchaser if he is prepared and is able to [exchange

unconditional contracts for the purchase of your property].

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if

such a purchaser is introduced by us in accordance with your instructions and this must be paid

even if you subsequently withdraw and [unconditional contracts for sale are not exchanged],

irrespective of your reasons.”

Link: https://www.legislation.gov.uk/uksi/1991/859/made/data.pdf

But worryingly, I found a decision from 2012 where the Property Ombudsman seems to say that the seller had to pay 50% fees, when a "ready, willing and able buyer" walked away.

Not worrying at all.  The correct interpretation of that clause.

If the buyer is ready, willing and able, and demonstrates this to the extent of saying "I am ready to exchange immediately" (or something sufficiently similar - no more enquiries, mortgage offer received etc), then if the seller says "no, not yet" and the buyer pulls out, then the seller would be liable for those fees.  The EA has done their job according to the contract in that case.

There's an argument that says the fees would only become due if the property was no longer for sale with that EA, and I've got nothing against that interpretation.

It's a naff clause though and should be got rid of.

eddddy

BarelySentientAI said:

Not worrying at all.  The correct interpretation of that clause.

If the buyer is ready, willing and able, and demonstrates this to the extent of saying "I am ready to exchange immediately" (or something sufficiently similar - no more enquiries, mortgage offer received etc), then if the seller says "no, not yet" and the buyer pulls out, then the seller would be liable for those fees.  The EA has done their job according to the contract in that case.

There's an argument that says the fees would only become due if the property was no longer for sale with that EA, and I've got nothing against that interpretation.

It's a naff clause though and should be got rid of

I don't think you've considered the phrase "in accordance with your instructions".

A I say, a seller's typical instructions would be...

• I intend to sell my  property and buy another property simultaneously

• So please introduced a buyer who is willing to buy my property on that basis

(i.e. introduce a buyer who will be ready, willing and able to exchange contracts when I am ready to exchange contracts on my purchase.)


The press release is just a summary of the Ombudsman's decision. So I wonder if there are key factors which aren't mentioned - like 'unusual' instructions from the seller, or extra clauses in the contract.