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Is there any penalty against a house vendor who collapses the deal post exchange of contracts?

(20 Posts)
faraday Thu 09-Jul-09 08:20:31

If I as the buyer renege on the sales contract, I lose my deposit. If the vendor does the same, what happens to him? Do I have to sue him for compensation? Does anyone do that?

Lilymaid Thu 09-Jul-09 11:47:30

Bumping this.
I presume you can sue for breach of contract, but your solicitor will advise you of this, surely?

scaredofthegarden Thu 09-Jul-09 11:53:08

Not a conveyancing solicitor but yes you should be able to sue for breach of contract. You would probably only recover your actual financial loss ie solicitors fees etc.

faraday Fri 10-Jul-09 16:47:58

Yes, I'm wondering as you do hear so often of vendors changing their mind on the settlement day!

ilovemydogandmrobama Fri 10-Jul-09 16:49:14

Do you mean before you exchanged contracts? Until then, it's all 'subject to contract'

Fimbo Fri 10-Jul-09 16:51:45

Do you mean if someone pulls out after exchange but prior to completion?

It probably does happen but I am not aware of it happening to anyone I know, so therefore cannot answer your question.

GrinnyPig Fri 10-Jul-09 17:00:25

We had a problem with the house we were buying. The problem happened before we exchanged contracts but although the vendor, his solicitor and the estate agent all knew about it they didn't tell us. We found out the day after exchange of contracts. We wanted to pull out before completion but our solicitor warned us not to because of the risk of being sued by our buyers. He certainly seemed to think that not only could they sue for actual costs incurred but also for compensation. We therefore proceeded with the sale but didn't know until the day of completion if we were going to go ahead with the purchase or not. We did go ahead as we were able to agree a discount from the vendor as compensation.

faraday Fri 10-Jul-09 18:52:10

OK!

Yes, I do mean post- exchange but pre- completion. Our EA said that up until exchange it's all 'gentleman's agreement'.

We are hoping the period from instructing our solicitor to exchange is SHORT!

Tillyscoutsmum Fri 10-Jul-09 18:57:59

You can sue for breach of contract but quantifying the actual "loss" is difficult so claims are often not made.

Obviously legal fees etc. can be easily quantified, as can any deposits you've paid to removal firms etc. and any compensation you have to pay to your purchaser (for the same things as above and right down the chain) - but the hassle/time wasted/potential uplift in the market whilst the deal has been with solicitors etc. are all must more difficult to measure so rarely get taken into account.

Is there any reason why you think your vendors might be getting cold feet ? Or is it just usual last minute nerves ?

Mintyy Fri 10-Jul-09 18:59:27

shock at posters not understanding thread title. Don't think you could have spelled it out more clearly faraday.

The period from exchange to completion is usually very short. 2 weeks to same day ime. On exchange it is normal to have a completion date agreed.

If the vendor pulls out after exchange then they have breached contract and the buyer has full weight of the law on their side.

And vice versa.

faraday Fri 10-Jul-09 19:40:14

Thanks Mintyy.

We've agreed with Oct 1st OR SOONER as completion to give our vendors a chance to find somewhere (we worry they're in for a shock: they're buying local and are currently feeling 'quids in', a happy state that will evaporate as soon as they realise you have to view AND OFFER on the first day a property hits the market, and even then perhaps a bit ABOVE asking price! The clue should be in that happening to them as vendors!)

They've SAID they'll rent if necessary to make sure we don't walk away if they breach the Oct 1st deadline but we'll see. I do wonder if they might stall with exchange to get as close as poss. to Oct 1st to buy themselves time to either buy, or withdraw from this contract. Guess we have no comeback with that!

ingles2 Fri 10-Jul-09 19:50:17

we were in the most awful position on buying this house.
we had an orthodox jewish businessman buying our london house and we had exchanged.
We were then told by our solicitor that he was going to fail to complete.
Now I can't remember exactly but I seem to remember there is a further 2 week period after completion day where they have to pay you 10% of your deposit and I think that's daily.
Now we didn't actually get any further because our estate agent immediately held an open hour, invited various jewish businessmen he knew and we had 4 other offers on the table the same day. funnily enough the original buyer managed to complete shortly after schedule but it was the most worrying/anxious time ever because being in a chain, we were going to fail to complete as well.
I had never heard of this, but I gather it's relatively common particularly within the orthodox jewish community.

faraday Fri 10-Jul-09 19:57:17

Blimey!

ingles2 Fri 10-Jul-09 21:11:51

grin
I'm sure your buyer won't want to exceed completion, I think it's a legal nightmare. Can you get them to exchange asap with a completion date set for the 1st Oct, then you know it's going to happen.

HerHonesty Sat 11-Jul-09 11:00:40

yes, you can sue the vendor for breach of contract if falls through all together, typically the amount you have placed as a deposit.

personally i have only ever exchanged with an agreed completion date (have bought 5 properties in my time, so not an expert!).

if they miss the completion date you can also claim costs for each day of non completion, typically a % of the sale price per day.

this happened to my parents. the completion did not take place due to some money not being transfered. it took 4 days in all, the amount they got paid for a new kitchen!

HerHonesty Sat 11-Jul-09 11:02:57

oh and the worst thing was that the mother had not been told completion had not taken place (it was in 1999 and she didnt have a mobile!) and turned up at midday with her 4 kids and two removal vans expecting to move in!

faraday Sat 11-Jul-09 13:58:44

This is the sort of thing that frightens me!!
I do wonder if, though by and large the big issues happen when exchange and completion happen on the same day!

Aeschylus Sat 11-Jul-09 14:19:26

funnily enough, just ut our house on Market Today, saw this Thread this morning. est was here at luuchtime

he said" you sue for 10%, as est agents fee become payable after contracts are exchanged"

he went on to say, as long as you agreed to re-list with the same est agent they would not charge you, but still sue for the 10%

HerHonesty Sat 11-Jul-09 20:29:57

EA is wrong, fee becomes payable after completion, check that is in our contract.

know what you mean faraday - in this case it was 40k coming from abroad, just didnt clear in time.

HerHonesty Sat 11-Jul-09 20:30:25

sorry, your contract.

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