What to Expect When Pulling Out of a House Sale in the UK
Buying a house or any property for that matter is one of life’s biggest challenges and achievements. It’s even more impressive considering how hard it must be to save up to purchase good properties nowadays.
However, there’s no denying the fact that life can be unpredictable. Whether it’s due to personal matters or something completely unexpected, you might find yourself in a situation where you have to pull out of a sale or purchase. It’s important to know what to expect both as a seller and a buyer and what you can and cannot do.
If you’re thinking about buying a house but worried about the commitment that comes with it, we’re here to help you understand the process more.
Here’s what to expect should you ever desire to pull out of a purchase.
“Can I Pull Out of a Property Sale or Purchase?”
First and foremost, you’re probably wondering whether or not you can even pull out of the purchase. The simple answer is yes. The more complicated one is. It depends on when you decide to pull out. Buying any property involves the conveyancing process. This can take anywhere from 3 to 12 months.
Ideally, you won’t be in the position to have to pull out, whether as a seller or a buyer. However, if the situation calls for it, the best time to do it is before exchanging contracts. When you decide to pull out of a sale, notify the conveyancing solicitor and determine the following steps to terminate the transaction successfully.
The later you do it, the more consequences and possible fees you are facing. Here are some of the potential financial implications you might face when you pull out:
- The buyer losing their deposit
- Both parties losing non-refundable costs, such as conveyancing costs
- The party at fault being taken to court to cover losses
Before the Exchange of Contracts
As mentioned before, the best time to pull out of a house purchase is before exchanging contracts. During this time, the transaction is not yet legally binding, making things easier for both parties. The earlier the sale is cancelled, the simpler the process and the less costly fees involved.
- As the Seller
As the seller, you have the right to reject offers or walk away from a property sale. However, depending on the contract you have with your agent, you might be expected to pay for the estate agent fee.
As long as the agent could find a willing and able buyer for your property, they’ve done their job. Make sure to check the terms of your agreement with the agent before making any decisions.
- As the Buyer
Pulling out of a house sale before the exchange of contracts might work out better for the buyer. Of course, at this point, it’s unlikely that you’ve had to put down any money towards the purchase of the property.
However, you and the seller will likely have to pay specific conveyancing fees even if you pull out this early. Sometimes, solicitors will have already done some work up to this point, and you are liable to pay for their labour. Make sure to read your contract carefully to understand the weight of your decision.
After the Exchange Contracts
Pulling out of a house sale after the exchange of contracts will be much more difficult regardless of whether you are the buyer or the seller. At this point, pulling out of the sale is considered a breach of contract. Whoever withdraws from the transaction is likely to face severe penalties. The worst-case scenario is possibly facing a lawsuit from the party not at fault.
- As the Seller
The buyer can issue a “Notice to Complete” to you, as the seller, if you decide to pull out of the property sale after the exchange of contracts. This ensures that you are liable to pay a daily interest rate for each day the transaction is not completed. On top of that, you must also return the buyer’s deposit.
The buyer will also return any and all documents related to the transaction at your expense. If you fail to complete these tasks during the 10-day grace period, the buyer has the option to take you to court.
- As the Buyer
Like how the buyer can issue a “Notice to Complete” to the seller that cancelled the transaction, the same can be done to you as a buyer, the process involved is the same, and you should expect the same consequences.
On top of the fees you will be facing, you will also lose the claim you have on your original deposit. Even as this is being settled, the seller can already begin to re-sell the home while claiming any other damages from you.
The Bottom Line
Buying a house or selling it is a big undertaking. No matter how unpredictable life can be, it’s essential to understand the consequences of pulling out of a property sale. The financial implications of disrupting the conveyancing process may even cost more than it’s worth. So, be sure to consider your decision carefully.
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