House Sale after falling through

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The_Banker

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Mrs Banker sold her house a few weeks ago (or at least she thought she did) so it has been off the market for quite a few weeks.
The buyer is now saying that her mortgage approval has been withdrawn so she won't go throught with the sale.
The thing is, Mrs Banker hired a solicitor to draw up contracts and get title deeds from the Building Society so there will be a fee due to the solicitor.
Because a deposit was paid by the buyer has Mrs Banker any recourse to having these fees paid due to the sale falling through at the buyers end?
All along we were told that the delay in completing the sale was because the buyer was having trouble getting life assurance but now it appears that she isn't going throught with the purchase (for whatever reason).
Any advice or guidence is appreciated.
 
There is no binding contract in existence until the contract is signed by both parties, exchanged and an agreed deposit is paid. Until that happens, either party is free to walk away. If the deposit was a booking deposit, then that is refundable to the proposed purchaser.

Vendor pays all their own costs.

I tell all my clients that this is the reality of the market at the moment - they don't want to hear that but better that they grasp how tough things are so that they can be realistic in their expectations of (a) the market and (b) that the deal is not done and dusted until the money is in the bank. Preferably not Northern Rock.

mf
 
I would not think anything is owed the solicitor now, assuming you go ahead with a sale to a different buyer and pay costs (for one sale not two) later.
 
yankinlk said:
I would not think anything is owed the solicitor now, assuming you go ahead with a sale to a different buyer and pay costs (for one sale not two) later.
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Ah. I take it you are not a solicitor. I love the concept that solicitors should carry the cost of a vendors sale falling through. Work is done. A fee is due. A solicitor may take the view that they will roll the charges into another sale but the first transaction was just that - uncompleted perhaps but still a separate transaction.

A lot of properties are not shifting at the moment. This house may not sell for several months or a year or at all. There will be additional costs.

mf
 
It does no harm to ask a solicitor their fees in advance and to clarify that there will be no fee if a sale falls through.
 
Solicitors do discuss fees in advance.

If the sale falls through - why should the solicitor not be paid fees for work done? Is that on the basis that its not the vendors fault? Or because vendors don't understand that when they engage someone to work for them they accept responsibility for that persons fees?

I can understand if after one quick general phone call to engage a solicitor, followed shortly afterwards by a call confirming that sale has collapsed no fee might be due but picture this:

1. V calls solicitor, discusses fees, engages solicitor.
2. S opens file and sets up file and client finance card, writes out confirming fee scale, enclosing letter of authority to be signed and returned so that deeds can be taken up, asking client to comply with money laundering obligations, enclosing detailed questionnaire to be completed by client including information on marital status ( state marriage cert, Deed of Separation, Waiver, Divorce Decree etc.,etc if applicable all to be returned), tax status of property - (investment or residence), PPS numbers, planning information - any extensions/structural alterations etc.,etc, copy Mortgage statement to verify balance and institution.
3. V returns some, but not all, of required information. Solicitor takes up Deeds , raises further queries plus responses to earlier unanswered queries, drafts contracts on the basis of earlier responses, deals with Auctioneer, asks Auctioneer to specifically deal with any prospective purchaser ( of which there are precious few right now) on the basis of price, contents and closing date.
4. Purchaser found, pays booking deposit and nominates own solicitor. Auctioneer notifies both solicitors of sale price but no info on closing date or contents. Solicitors then try and negotiate on contents and closing date.

5. S issues contracts having now been told that V has an unauthorised extension to the rear which required planning permission which was not obtained.

P cannot organise finance as interest rates have risen and bank has pulled the loan offer. Sale collapses.

At what stage of that process, and when sale collapses, should the vendor expect not to have to pay fees to their own solicitor?

mf
 
I recently sold my home after a sale falling through and our solicitor had send out the contracts to our buyer and followed up with letters and phonecalls. I fully expected that we would be charged for the full cost of this as if the sale had gone through. As it was our solicitor didn't charge us as we had another sale a week later and he used the same contract just changed the names.

To be honest I think that this was just a gesture and definitely not to be expected. A solictor has given time to the work so therefore should be paid.
 
mf1,
I do not thing it would that difficult to have standard penalty clauses agreed between seller and buyer at very early stages so that ALL parties are covered in the case the buyer or seller bails out.
That would make people think a bit more when commiting at selling / buying a property.

It is a joke that a deposit is refundable. The deposit should be non-refundable, and would go some way towards paying solicitor and EAfor work done, and offer compensation to seller for waste of time. At least, it would cover the case of a buyer changing its mind. That's happening in some other countries, so why not in Ireland?

Going further, seller could have to place same amount as buyer's deposit in trust, and would loose that amount shall he decides not to sale anymore.
 
Hi Bacchus

A booking deposit is refundable - a contractual 10% deposit is generally not. And yes, it does go towards the costs vendor incurs.

The system actually does work well enough. Once contracts are signed and the 10% ( or less if agreed) deposit is paid, its generally all systems go. The problem is with the early stages before either party is committed and when either party can walk away. Market forces tend to influence peoples behaviour at this stage.
Vibrant market - vendors get to be picky/act the maggot. Depressed market - purchasers choosy and acting the maggot.

At the moment, there are too many properties, too many vendors and not enough purchasers. Until that corrects, things will be messy.

mf
 
With all respect, how can you say the system works well ?

Ask the OP who is incuring costs because the buyer is pulling out for whatever reason. An early non-refundable deposit would go towards sorting the OP's problem.

It takes too long between "Sale Agreed - Refundable deposit" and "10% non-refundable deposit & contracts being exchanged".


What do you think happen to my deposit for a new car if i decide not buy it?

Too many people seems to fall off their bed, "informally commit at buying (informally as initial deposit is refundable)" a property, and then realise that they can not/do not want to buy because their have not done their homework (e.g. mortgage, insurance policy, market right for them, etc...)

Note: to keep the balance right, same applies to seller who them decide not to sale because ........
 
"Too many people seems to fall off their bed, "informally commit at buying (informally as initial deposit is refundable)" a property, and then realise that they can not/do not want to buy because their have not done their homework (e.g. mortgage, insurance policy, market right for them, etc...)"

But what you've said above is precisely what the problem is - a non refundable deposit payable earlier in the transaction will arise at the same time as they see their solicitor, talk to their bank, and come to their senses.

I have perfectly sensible clients ( 2 sets of them) who have fallen in love with the home of their dreams, have offered decent enough figures which have been accepted and who are only now realising that they cannot buy until they sell. The harsh reality of the market is only now hitting them. Its a relatively new phenomenon. Punishing them with a penalty will not help the situation.

Good Estate Agents should be probing prospective purchasers about their ability to come through with funds and should alert the vendors to the issues. Vendors then should make their own minds up. Do they hold out for a higher figure or go sale agreed in the hope it will work out in a difficult market?

Its hard times.

mf
 
mf1 said:
But what you've said above is precisely what the problem is - a non refundable deposit payable earlier in the transaction will arise at the same time as they see their solicitor, talk to their bank, and come to their senses.
Click to expand...

May be i was not clear enough in my explaination.. What i meant is that , if people have to pay a non-refundable deposit from day1 to secure a property, then they will be somehow be forced to talk to their bank, see a solicitor, etc..., basically come to their senses BEFORE they commit to buy and let a seller think that he has sold. At least, this is my view point...

Is it hard times or reality times ahead?
 
mf1 said:
Ah. I take it you are not a solicitor. I love the concept that solicitors should carry the cost of a vendors sale falling through. Work is done. A fee is due. A solicitor may take the view that they will roll the charges into another sale but the first transaction was just that - uncompleted perhaps but still a separate transaction.

mf
Click to expand...


Roll out the violins for the solicitors then. Doubt there will be dry eye in the house for them! Do solicitors give a discount for shoddy work then? Can you pay them less when they drag the process out? How about when they fill out documents incorectly? I swear I think they cut and paste one house's details onto another - Ive never recieved complete documents first time. Always find wrong house details or house prices somewhere.

Sorry folks, your gravy train has dried up - dont try billing house sellers twice now!
 
yankinlk said:
Roll out the violins for the solicitors then. Doubt there will be dry eye in the house for them! Do solicitors give a discount for shoddy work then? Can you pay them less when they drag the process out? How about when they fill out documents incorectly? I swear I think they cut and paste one house's details onto another - Ive never recieved complete documents first time. Always find wrong house details or house prices somewhere.

Sorry folks, your gravy train has dried up - dont try billing house sellers twice now!
Click to expand...

Huh?

Many solicitors* will charge a reduced fee if the sale falls through at an early stage - but if, as seems to be happening a bit, it's happening at a fairly late stage, the solicitor will have taken instructions, taken up the deeds, carried out the legal searches, and drafted contracts. This represents a significant amount of work, including outlays. If the property is sale agreed a second time, only some of this work will have to be replicated to bring it to completion and many solicitors will charge in a way that reflects this. However, it is more work than if the sale goes through smoothly in the first place, and sometimes substantially so. Do you suggest that solicitors simply bear this cost and charge as for a single transaction?**

*No, I'm definitely not a solicitor. But it's my understanding they don't all have horns, tails, and a three-pronged fork to jab at clients.:rolleyes:

** On the other hand, I fail to see how a percentage fee is justifiable for a conveyance. Some are a great deal more complicated than others, and a flat fee won't reflect the nature of the specific transaction. My (excellent) solicitor charges by the hour and his rates have ended up being substantially lower than the initial quotes I got.
 
Dreamerb said:
This represents a significant amount of work, including outlays. If the property is sale agreed a second time, only some of this work will have to be replicated to bring it to completion and many solicitors will charge in a way that reflects this.
Click to expand...

Im an IT expert so let me help those poor solicitors out...CTRL-C then CTRL-V should cover the change of buyers name. Same house, same deeds, same search etc...cmon, dont kid a kidder.
 
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