If you decide partway through the conveyancing process that you no longer want to proceed, you may be able to pull out without sanctions.
Pulling out of a sale or purchase before contracts are exchanged is possible, although you are likely to be liable for some of the costs that you have incurred, such as payment for searches, legal fees and a survey.
The sale and purchase process
Once you have found a buyer or a property to purchase, the estate agent will send the details to your solicitor who will start work on your behalf.
If you are buying, this will involve checking the legal title to the property, ordering searches and raising enquiries with the seller’s solicitor.
If you are selling, your solicitor will draw up the contract and send this to the buyer’s solicitor together with a package of information about the property.
During this stage of the process, you are not legally bound to complete the transaction.
The next stage is to exchange contracts. A deposit will be paid by the buyer to the seller’s solicitor and a date for completion will be set. At this point, you become legally obliged to go ahead with the sale or purchase.
Pulling out after exchange of contracts
If you withdraw from the transaction after exchange of contracts, you will be in breach of the contract.
Generally, the party who is not defaulting will issue a Notice to Complete to the other party, which would give them ten days in which to complete. The person who has failed to complete will also be required to pay a daily rate of interest to the other side.
The party who is not at fault should ensure that they are still ready and willing to complete the transaction during the ten-day period, or they then be in breach of the contract themselves.
If the buyer does not complete during the ten days, then the seller can end the contract and keep the deposit, which is generally 10 per cent of the purchase price.
The seller can then sell the property to another buyer. There is also a risk that if the property has depreciated in the meantime that the seller could make a claim for losses incurred because of this.
If it is the seller who fails to complete the transaction then the buyer is entitled to hold that the contract is at an end and require the deposit and any documentation to be returned at the seller’s expense.
If the party who is not at fault has suffered any losses because of the breach of contract, then they may be entitled to bring a claim for these.
It is unusual for a transaction to fail once exchange of contracts has taken place. If you are buying or selling a property, you can be assured that we will do everything possible to ensure that your transaction goes smoothly.
If you are thinking about buying or selling a property and you would like to speak to one of our expert lawyers, ring us on 0333 305 5189 or email us at info@lpropertylawyers.co.uk
