Both the seller and buyer have the freedom to pull out of a house sale until the contracts have been signed, and there’s not much that can be done about it from a legal perspective.
Buying or selling a house is a significant decision that involves various legal and financial obligations. However, circumstances change, and you might find yourself in a situation where you want to pull out of a house sale.
In this blog post, we will explore the topic and provide you with a clear understanding of the possibilities and implications of withdrawing from a house sale.
Understanding the contract
When you decide to buy or sell a property, you typically enter into a legally binding contract with the other party. The contract outlines the term and conditions of the sale, including the agreed-upon price and completion date.
However, if you decide to pull out before the contracts have been signed, it is important to know that an offer to buy or sell may be formally agreed upon but is not binding; thus, either party is entitled to withdraw.
Consequences of pulling out as the buyer:
- If your conveyancer has begun work such as carrying out searches and surveys, they will still likely charge you for the work. You will also need to pay for any disbursements made by your conveyancer.
- Your reputation and future opportunities as a buyer may suffer. Pulling out of a house sale without a valid reason can harm your reputation in the real estate community. Future sellers or buyers may be reluctant to engage in transactions with you.
- If the contract has already been signed and you pull out, you will likely lose your deposit.
Consequences of pulling out as the seller:
- You will have to check the terms of agreements with your estate agent, solicitor and conveyancer.
Communication and negotiation
If you find yourself in a situation where you want to withdraw from a house sale, it’s crucial to communicate your concerns openly and honestly with the other party. Depending on the circumstances, you may be able to negotiate a mutually agreeable solution that avoids legal conflicts.
Reasons for pulling out of a house sale:
- A negative search or survey
- Financial issues
- A change in circumstances
- Legal issues
- Chain problems
- A change of heart
Gazumping and Gazundering
Due to the fact that offers are not legally binding, the offer price can change right up until the last minute in one of two ways.
Gazumping: this is where the seller receives a higher offer. If this happens, the seller may threaten to pull out of the sale unless the buyer is prepared to match the higher offer.
Gazundering - the buyer may decide to reduce their offer at the last minute, hoping that the seller is too committed to the sale to reject the lower offer.
While it may seem unfair, and often it is, both are legal. The agreement between you and the seller does not become legally binding until contracts have been exchanged, which can leave a long period where buyers and sellers are in danger of gazumping and gazundering.
The best ways to avoid these scenarios are to get insured with Home Buyer Protection Insurance, for example. Get to know the other party so that you’re not just a faceless entity, and lastly, be prepared to move quickly (something we at Muve can help you with).
If you are thinking about pulling out of a house sale, you need to consider how far along the process you are. The further along you are, the more likely it is that you will still have to pay conveyancing fees or other costs that have been incurred thus far; you may even risk being served with a notice of completion.
For more legal advice, speak to one of our trusted conveyancers here at Muve. We can help you to figure out what steps you should take and make you aware of any costs that you may incur. Please don’t hesitate to get in touch or get a free quote.