Vendor stalling signed contracts

T

Thesearcher

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Hello,

We recently purchased a property with signed and exchanged contracts. Now, over a month past the agreed closing date, we’re increasingly suspicious, as the vendor’s solicitor has been evasive about the delay.

We understand that a third party has voiced objections to the sale, though not through any formal legal challenge yet. However, this could pressure the vendor to withdraw.

If that happens, is it standard to claim our legal fees along with the deposit return without needing to go to court? How likely are they to cover these costs if the sale falls through?

Alternatively, are we within our rights to compel them to complete the sale, particularly if we believe the third party’s claim has no legitimate basis? If any third-party issues remain, could we negotiate for the vendor to resolve these after the sale or request a “war chest” reduction in the sale price to cover any future complications?

Ultimately, I suppose the question is: how much leverage do we have to enforce the contract now that it’s been signed?

(We have a good solicitor, just looking for a second opinion from anyone experienced with this kind of situation.)

Thanks!
 
I am not a lawyer, but...

If you have exchanged contracts, then they are legally obliged to complete the sale.

Their solicitor should not have allowed them to sign the contracts if there was anything stopping them from selling it. And your solicitor would have conducted searches to make sure that the title was clean.

You can go to court and the court will order that the sale go through.

That will take quite some time but you should be able to recover your legal costs from the vendors.

Has your solicitor suggested anything else?

Brendan
 
Thanks Brendan,

The third party most likely surfaced since the contract was signed so the vendor may be in a predicament. It's also likely the third party won't make a written objection as they stand to come out worse. I can't divulge too much only to say they did own it at one point but it was taken from them (not their home) and they are floating around in the background.

I'm not keen on the court option as that's high court I presume?

Our solicitor hasn't suggested anything yet, we're still in a holding pattern waiting for a response from the vendor's solicitor.
 
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Oooh.

If you've got an unconditional contract signed by the vendor you can enforce it, and compel them to close the sale. (Just as, if the shoe were on the other foot, he could enforce the contract against you.) The process here, from memory, is that you serve a "time is of the essence" notice setting a deadline for completion and, if that deadlines passes with no completion, you issue a vendor and purchaser summons seeking an order to compel him to complete. That's an accelerated process that's availlable or exactly this circumstance, so while it may not be cheap it should be pretty quick and you should get an order for your costs from the vendor.

But . . .

It seems there's somebody out there with some kind of a claim against the property. You don't say too much about the claim and you may not know too much about it. Is it a good claim? Is it a claim that follows the land, or after the sale would they just have to chase the sale proceeds in the vendor's hands? We don't know, and you may not either. So if you do complete the sale, there's a chance that you may be buying into a property dispute in which you, as the owner of the disputed property, then become embroiled. You really, really don't want to find yourself in that position.

So find out as much as you can about this possible claim, and get advice from your solicitor about the implications it might have for you if you buy the property. And then make a decision about whether you want to enforce this contract, which you're entitled to, or try to negotiate your way out of it.

But be aware that if you try to get out of it you may find that, when push comes to shove, the vendor would rather complete than see you walk away. In that case you may have to complete the contract and then, if sued by the third party, join the vendor in the proceedings and sue him for breach of warranty (it turns out that he didn't have good title to the premises) and/or misrepresentation (he misled you about the existence or nature of this claim). Like I say, this is a mess you should avoid if you can.
 
The OP's solicitor is best placed to advise on the specifics here, the searches will uncover any registered claim. Some 3rd party may have a hold over the vendors, but that shouldn't follow the purchase.

I've gone through commencing Specific Performance proceedings against a vendor in the past. That was resolved before it ever got to a court date which I understand is common.
 
I have also been through Specific Performance, when the purchaser and myself had both signed yet the purchaser would not stump up the funds. Clean title. Selling to an investor who was just being a pain. My solicitor was good enough to get reasonable costs out of them even though we never went to court. It took a bit of time, but it forced things to go through eventually.
 
Great, thanks @TomEdison @THE_Chris @Leo for your thoughts on this. From what I can gather there hasn't been a registered claim but a verbal claim to a third party. There may have been a registered claim since contracts were signed so we can check this again.

It seems there is a condition in the contract below I assume this to mean that they can pull out unless we're happy to go with it warts and all?

"In the event that a third party asserts any legal, equitable, possessory claim or interest or interferes with possession of the Property, then the Vendor shall be entitled to rescind the contract by notice in writing to the Purchaser unless the Purchaser agrees to proceed without an abatement of price within 5 days of being notified of the purported claim or interest by the Vendor."

@Leo , when you say shouldn't follow the purchase is that a definite or a hopefully?

@TomEdison They still believe it's still their property when it obviously isn't it was taken from them by the banks.
 
Thesearcher said:
@Leo , when you say shouldn't follow the purchase is that a definite or a hopefully?
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In legal terms, the searches your solicitor will perform prior to closing should give good assurance that all is in order in that regard. That said, you do hear of occasional cases, particularly involving rural land where someone who thinks they have an entitlement continues to harass new owners.
 
Thanks again, I'll definitely discuss the search with the solicitor prior to closing.

What you say sounds a bit like The Field
 
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I had never heard of this in a contract before. Is it a standard term or was it put in by the vendor in anticipation of a possible objection?
 
TomEdison said:
I don't think this is a standard term. But — wild guess — it might be a term that is commonly inserted where a creditor has repossessed, and is selling, a property.
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Thanks that's probably the case. I'm looking into it at the moment with solicitor. Thank you again for your observations.
 
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