delayed completion of contracts - 12% penalty!!

P

Phil_FTB

Guest
Hi All,

I have just received the contract for the purchase of a second hand apartment - the seller has inserted a clause stating that if the completion date is delayed by me, they will impose a penalty of 12% of the outstanding amount (eg - if purchase price is 100,000 and I have given them 10%, then the outstanding amount is 90,000 - so if I complete late they will attempt to take me to court for 12% of 90,000)

Questions:

1) is this normal ?
2) should I insist this clause is removed / struck off ?

My solicitor has said that this is standard and he has never seen a seller actually enforce this

any thoughts - most welcome!!
 
We too had a similair clause. Our solictor is a close friend and he had no issue with it.

With that 'incentive' he left ample time to close and pushed out their suggested data. I also chased everyone in the process and be warned the life insurance element took the longest.

Cheers,
MAJJ
 
Just to clarify - it is not normal to impose a penalty of 12% of the outstanding amount; rather, one pays interest at 12% on the outstanding amount. While you solicitor was no doubt trying to reassure you, it would not be true to say that interest clauses are never enforced. Certainly, it is very rare. I would say that perhaps one in 400 sales would end up in a situation where interest is being charged.
 
we had a similair clause in ours and got our solicitor to remove it as he felt it was quite risky ---- they are many small things outside your control that could delay the closure and you dont want to be penalised for it.
 
You must log in or register to reply here.
Back
Top