What happens if sale of my house falls through?

Contracts just about to be signed on sale of my house - then I will be signing contracts on another house. Worst case scenario - what happens if my buyer pulls out after signing? Do I get his deposit? Because if he pulls out, I will have to pull out of purchase, and lose my deposit..?

If the contracts have been signed by the purchaser for your house, sent to your solicitor with a deposit, signed by you and one part returned, as long as the contract is unconditional (i.e. not subject to satisfactory survey, loan etc etc), the purchaser would be in breach of contract to pull out and yes you would be entitled to keep the deposit which he/she has paid over on signing. If you sign an unconditional contract in turn for your purchase and pull out, the same case arises. If you have an unconditional contract in place for your sale you should be safe enough to proceed with signing contract for purchase, speak to your solicitor if you have any concerns about your purchaser.

I think that it is not a simple as keeping the deposit. You put the house back on the market and when you sell, you can claim any extra expense encurred by you.

AFAIK, if you got a much higher price, the previous buyer, who pulled out, could try to claim that you were noty out of pocket and look for some of the deposit back, but they would have to fight for it.

Condition 41
General Conditions of Sale
2001 (Revised) Edition

FORFEITURE OF DEPOST AND RESALE

If the Purchaser shall fail in any material respect to comply with any of the conditions, the vendor (without prejudice to any rights or remedies available to him at law or in equity) shall be entitled to forfeit the deposit and to such purpose unilaterally to direct his solicitor to release same to him AND the vendor shall be at liberty (without being obliged to tender an Assurance) to resll the subject property, with or without notive to the purchaser, either by public auction or private treaty. in the vendor of the vendor re-selling the subject property within one year after the closing date (or within one year computed from the expiration of any period by which the closing may have been extended pursuant to condition 40) the deficiency (if any) arising on such re-sale and all costs and expenses attending the same or on any attempted re-sale shall (without prejudic to such damages to which the Vendor shall otherwise be entitled) be made good to the vendor by the purchaser, who shall be allowed credit against same for the deposit so forfeited. Any increase in price obtained by the Vendor on any re-sale, whenever effected, shall belong to the Vendor.