Buyer is trying to pull out after signing contracts

[mf1]

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

 

[grawns]

Re: solicitor walked away after buyer signed the papers

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.

 

[SadBob]

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.

 

[redskyatnigh]

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?

 

[mathepac]

Re: solicitor walked away after buyer signed the papers

... 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.

 

[Vanilla]

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.

 

[grawns]

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?

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.

 

[SadBob]

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.

 

[Bronte]

Re: solicitor walked away after buyer signed the papers

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.

 

[Brendan Burgess]

Re: solicitor walked away after buyer signed the papers

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.

 

[Bronte]

Re: solicitor walked away after buyer signed the papers

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.