# Buyer is trying to pull out after signing contracts



## mchcnw (11 Mar 2010)

I am currently selling my house. We have signed contracts with the buyer and the deposit is paid. The contracts were signed without being subject to survey. Once the contracts were signed we then signed a contract for our new dwelling and paid the deposit. The buyer then brought in a surveyor to look at the property. we checked with the solictor and they said we should allow the buyer to do this.The buyer passed the surveyor report to us. Having read the report it is ridiculous. we have just had our central heating system checked by an engineer and the surveyor report claims they are badly corroded.And the house needs upgrading from a c2 Ber to a c and this will cost in excess of 4500. Now the buyer has come back asking for a price reduction. When I consulted our solicitor, they informed us that they cannot advise us on this situation  and didnt want to know. We are not using an estate  agent and are getting no help from our solicitor and am wondering what our next step is


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## mchcnw (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

We have signed contracts and it wasn't subject to survey so how can the buyer threaten to renege if we dont meet their demands?


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## mf1 (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mchcnw said:


> We have signed contracts and it wasn't subject to survey so how can the buyer threaten to renege if we dont meet their demands?



It is impossible for anyone to accurately advise you as the information you are giving is so vague and one sided. A number of possible scenarios occur: 

1. Your buyer wants a price reduction and will put you through the hoops to get that. 
2. They are not a "mark" so even if you sue them to complete the contract you will get nothing.  

Your choices are to agree to the reduction and complete, or not agree and either complete or not complete. 

These are the kind of issues an estate agent would deal with for you. It is quite likely that your solicitor feels they do not want to get embroiled in price negotiation.

mf


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## mchcnw (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

I dont wish to involve our solicitor in price negociations. I just thought then when the contracts were signed, they were legally binding unless one of the clauses had been broken


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## mf1 (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mchcnw said:


> I dont wish to involve our solicitor in price negociations. I just thought then when the contracts were signed, they were legally binding unless one of the clauses had been broken



So go ahead and sue the buyer? How long will it take and what will be the end result?

mf


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## mchcnw (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

I have signed a legally binding contract for my new home and if I cant complete because the buyer of our old home reneges then I am liable to be sued


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## AlbacoreA (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mchcnw said:


> I....The buyer passed the surveyor report to us. Having read the report it is ridiculous. we have just had our central heating system checked by an engineer and the surveyor report claims they are badly corroded....


 
I think you need to clarify with the engineer why theres a difference between his check/report and the  surveyor report.


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## Neg Covenant (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mchcnw said:


> I have signed a legally binding contract for my new home and if I cant complete because the buyer of our old home reneges then I am liable to be sued


 
If your solicitor does not want to deal with it then it may be because
(i) you will not pay them, or
(ii) they do not trust you or find you very difficult to deal with, or
(iii) you don't follow the advice you are given and then try to blame somebody else when things go wrong.

Do you fit into any of those categories?


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## mchcnw (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

I would not say so, up to now I have followed my solicitors advice to the letter. I  have given no indication that I am not willing to pay the solicitor. Nothing has gone wrong. I am not looking to blame anyone. I am just looking for professional advice and beleved my solicitor would be the best person to advise me


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## mchcnw (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

The reason why I have posted is because I wanted advice about my situation. I am giving the full story, it would not be much point me telling half the story because the advice I get would not have any relevance to my situation.


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## Brendan Burgess (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

I do feel sorry for mchngw as it would seem reasonable to me to complete a purchase, once I had signed contracts for the sale. Now they are in an impossible position. 

Are there lessons to be learnt here? 
1) Tell the buyers to do the survey before they sign the contracts
2) Don't enter into a contract to buy until the money for the sale is actually in the bank.


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## mf1 (11 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

Are there lessons to be learnt here?

Oh yes!

1) Tell the buyers to do the survey before they sign the contracts

They should have done their survey before they signed contracts. Caveat emptor and all that. 


2) Don't enter into a contract to buy until the money for the sale is actually in the bank. 

That would be my view. It is a nightmare out there - very little is reliable. 

But, I find that a lot of people know far more than their solicitor. And as for - "should the solicitors have let me sign" ? Clients make their own decisions - solicitors advise. 

mf


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## Bronte (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mchcnw said:


> The reason why I have posted is because I wanted advice about my situation. I am giving the full story, it would not be much point me telling half the story because the advice I get would not have any relevance to my situation.


 
Do you have a copy of the contract?  What deposit has been paid and to who?  Did you discuss with your solicitor the implications of signing a contract to purchase if the buyer's of your house reneged?  Did you think about it?  Can you complete on the second purchase if you don't have the money from the sale of your house?  Did you discuss with your solicitor putting a clause in your purchase contact that it was subject to the sale of your current property?


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## Bronte (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



redskyatnigh said:


> Does any one know of a good solicitor who will stick with me while I am selling my house. As the sale just fell through after the buyer used a surveyors report to renege on going through with the sale and my solicitor said she was not getting involved, the buyer and I had signed the contracts.
> 
> If I am lucky enough to get a buyer again to look at the house can anyone recommend a solicitor who can follow through on process.


 
Did you have a deposit?  Was there a clause in the contract that allowed the purchasers to pull out if the surveyor's report was not satisfactory?  What is wrong with your current solicitor?


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## mchcnw (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

yes they put down a deposit. No I have checked with my solicitor there is no clause to allow them to withdraw because of a survey. My solicitor does not want to get involved with this part of the transaction and has informed me that the buyer trying to renegociate after the contract has been signed is happening a lot in the current housing climate. I did not expect the solictor to negociate on my behalf, however I was surprised that the solicitor did not want to advise as to what me options were, as they felt they did not know enough about property value and therefore could not tell if we were getting a good price for the house


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## Vanilla (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

Your answer is very confusing- did you ask your solicitor to advise you about the value of the house? 

Your solicitor is there to advise you as to the legal process of selling your house, the options legally open to you to enforce the contract- not to advise about the value.


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## Brendan Burgess (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



> We are not using an estate  agent and are getting no help from our solicitor and am wondering what our next step is



The price has been agreed. A deposit has been paid. 

How much is the price and how much is the deposit? 

1) You can negotiate a reduced price with the buyer but you are under no obligation to do so. 

2) You can issue proceedings to force the buyer to complete the purchase at the agreed price.

3) You can keep the deposit and try to sell the house to a new buyer. 

I can understand why the solicitor does not want to negotiate the price, but I can't understand why she has not advised you of these options.

It seems to me that they are trying to pull a fast one and it is not a matter of finance. Your solicitor should write to them telling them to complete the sale or she will issue proceedings to force them to do so. 

You should immediately advise the seller of the house which you want to buy of the problem and tell them you are trying to sort it out.


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## DBK100 (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mf1 said:


> So go ahead and sue the buyer? How long will it take and what will be the end result?
> 
> mf



So, the upshot is, that in this instance, a legally binding contract offers no protection to the vendor at all? 
It will simply be too costly and time-consuming to enforce? Why bother with it at all then?
Surely then, mchcnw can '_pass it forward_', and has little to worry about in relation to his contract to purchase being enforced...

The real lack of protection afforded to the average person in contract is astounding. Building contracts being another major example.


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## mf1 (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

"Surely then, mchcnw can 'pass it forward', and has little to worry about in relation to his contract to purchase being enforced..."

No. 

What this poster should have done is completed the sale of his/her own property before agreeing to buy another. Doing what he/she did left them with little "wriggle" room. 

This poster has been given a  lot of very good advice as to how to deal with their situation. They would be well advised to take it. 

mf


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## grawns (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

If the contract was subject to finance ( get out clause if the bank withdraws finance - standard clause for the past two years along with life assurance) and the bank wasn't happy with the survey and subsequently either lowered their mortgage offer or withdrew it, the purchaser has the right to walk away without penalty. Your solicitor should have explained this to you. He sounds inadequate .


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## mf1 (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

"He sounds inadequate . "

On the basis that you cannot have read the thread to establish the actual position, you are hardly in a position to make that comment. 

What is abundantly clear is that the poster has a vague idea of what is happening in one of the biggest transactions of their life but cannot seem to grasp or understand how to educate themselves to the reality  of property transactions ( including their own) in a recession.  

mf


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## grawns (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



mf1 said:


> What this poster should have done is completed the sale of his/her own property before agreeing to buy another. Doing what he/she did left them with little "wriggle" room.
> mf



FYI. This is not the way the property market works and that is why people sign legally binding contracts.


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## SadBob (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

We were in a similar position to this a year or so ago. Unconditional contracts signed and a week or two later after having difficulty getting an agreed closing date from the purchaser they turned around and decided they wanted a reduced price for no reason other than their own view of the then value of the property (the sale had dragged on a couple of months but this was the purchasers delay – not ours). 

We instructed our solicitor to issue a 30 day completion notice to the purchaser and the sale closed on the 30th day – I guess the prospect of interest at c.12% p.a. (from what I can remember) which is charged daily was enough of a kick to get them to honour what they legally agreed to do in the first instance .

May seem harsh but no one should sign legally binding contracts if there is even a slightest doubt they may not be able to or want to close on the deal. I cannot imagine why anyone would sign without having all surveys/valuations done anyway and also satisfied themselves that it is the right house for them.


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## redskyatnigh (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

What happens if there is an agreed closing date and that date passes  and the purchaser makes no contact, can the vendor start to charge interest to the purchaser... surely that is a difficult process and involves the courts?


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## mathepac (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



redskyatnigh said:


> ... can the vendor start to charge interest to the purchaser...


What does the contract say? Charging the notional interest, if its allowed for, and collecting it are different processes, the latter involving initiating court proceedings AFAIK.


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## Vanilla (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

In most standard contracts you have to serve a 28 day completion notice after the agreed closing date, if that further period expires then interest is chargeable at the rate specified on the contract. There are further provisions with regard to forfeiture of deposit, reselling to another party and pursuing the purchaser for loss on the resale, enforcement of the contract by issuing legal proceedings and so on.

The reality is though, apart from the forfeiture of deposit, many vendors prefer to walk away rather than pursue a purchaser as it can be so stressful, time consuming and expensive to do so, and at the end of a successful court action you still have to enforce the judgement against the purchaser and get them to come up with the money. If they themselves don't have money this can be difficult.


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## grawns (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*




redskyatnigh said:


> What happens if there is an agreed closing date and that date passes  and the purchaser makes no contact, can the vendor start to charge interest to the purchaser... surely that is a difficult process and involves the courts?



Under instruction from you, at that stage your solicitor will issue a 28 day completion notice. If they do not respond to that they are in breach of contract. 
 You can then invoke Invoke General condition 41 of the contract  
 
 
 You are entitled to rescind the contract as the Purchaser didn’t  complete in time. You are entitled to  forfeit deposit & direct the  solicitor to release same to you  AND you can resell property,  with/without notice to purchaser. 

 If you re-sell within one year of closing date any  deficiency arising on such re-sale & all costs & expenses in relation  can be claimed against the purchaser (who shall be  allowed credit for the  deposit forfeited).

 Any increase in price ( not likely) shall belong  to you.


There is a 21 day period from issuing the forfeiture notice in which they must issue and serve proceedings to prevent the forfeiting of the  deposit. This is where things get messy but they have to have proper grounds to sue.


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## SadBob (12 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*

I suppose it really all depends on how genuine the purchaser is and how the situation will genuinely impact on the vendor – obviously in MCHCNWs case it has a huge impact as they have signed contracts on another purchase, not as huge (albeit frustrating) for the OP as they have not committed to another purchase if I’m reading correctly.  

  If the purchasers were having legitimate problems in raising finance etc. and/or their circumstances have changed significantly which resulted in the delay or pulling out of the sale then I may not have been so quick to get the completion notice issued in my case – only for the reason of it possibly being  a long drawn out process (blood from a stone type of scenario). However, a surveyors report to my mind is not an acceptable reason especially after contracts were signed.  I suspected our buyer was chancing his arm and tried to get a lower price but I was aware of his financial position (due to an inept EA disclosing info to me that he shouldn’t have) and I called his bluff. I’m not sure if I would have gone down the legal enforcing route to get him to close but it worked out ok for us in the end and, if after the notice period, there was still no joy well then that’s another decision that has to be made.


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## Bronte (15 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



grawns said:


> FYI. This is not the way the property market works and that is why people sign legally binding contracts.


 
MCHNW was not forced into signing the new house purchase and in the very unstable property market we have they should have waited until their own houses was a) sold and b) monies received before purchasing another property. 

Not sure what legal advice they were given in relation to this aspect of the transaction. I certainly hope that solictiors are pointing out the pitfalls of being in a chain but at the end of the day clients make their own decisions. 

Their solicitor is perfectly correct in not having anything to do with the negotiation of purchase price or the value of property.

MCHNW would be well advised to now reduce the price in order to complete if he is bound by the new purchase contract. Otherwise there are going to be no winners here and 3 unhappy sets of people, some of whom or all of whom are going to be out of pocket if they don't get their act together quick.


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## Brendan Burgess (15 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



Bronte said:


> MCHNW was not forced into signing the new house purchase and in the very unstable property market we have they should have waited until their own houses was a) sold and b) monies received before purchasing another property.



If MCHNW made a mistake, it is a mistake that many people would have made. I know that I would be happy to commit to a purchase after I had exchanged contracts for the sale of my house. Up to now, I would have thought it far too conservative to wait until the actual cash was in the bank. 

I am sure that I have said it on other posts in the past - "Don't commit to buying a new house until you have signed a contract for the sale of your old house". 

I have written a new Key Post on the topic.


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## Bronte (15 Mar 2010)

*Re: solicitor walked away after buyer signed the papers*



Brendan said:


> If MCHNW made a mistake, it is a mistake that many people would have made. I know that I would be happy to commit to a purchase after I had exchanged contracts for the sale of my house. Up to now, I would have thought it far too conservative to wait until the actual cash was in the bank.


 
Well that's the way it used to be pre boom and wasn't a problem.  But now postboom it might be more prudent to have the money in the bank.  There are a lot of purchasers doing this 'negotiation of price' after contacts are signed if some of the posts on AAM are to be believed so everybody needs to be on their toes.  Plus you have the banks offering x amount of mortgage and then changing it downwards if the valuation doesn't match or the survey shows some issues.


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