9 Sep 2016
Author: Stephen Breen
Help: The buyer of our house pulled out!
When a buyer pulls out of purchasing a property, this can cause significant expense for the seller. They will have to remarket the property and may not achieve the same price they sold it for the first time round. It can be extremely frustrating, particularly if there were other interested buyers at the time of marketing the property.
When cash is not king
Sometimes an estate agent will find a so-called ‘cash buyer’ for your house which can sound like a fantastic opportunity and you may be tempted to accept their offer just because of these words alone. However, just because someone calls themselves a ‘cash buyer’ is no guarantee they have the full purchase price for the property sitting in their bank account ready to transfer. Your buyer may still have to get a mortgage despite implying otherwise which can cause the same delays to exchange or completion of the sale.
When a buyer pulls out and you have to drop your price to find another buyer, you may find yourself losing out on thousands. Whether you have a remedy or not depends on whether you exchanged contracts with the original buyer. If you did not exchange contracts, unfortunately you cannot take action against the original buyer for your loss. However, if you did exchange contracts with the original buyer, you may be able to pursue them for your losses under the terms of your contract.
Your contract will usually provide that the purchase price must be paid on a set date (the completion date) and failure to do this is a breach of contract. You can demand interest on the price until it is fully paid. If it is not paid (with interest if applicable) within 14 days, this is usually classed as a material breach of contract. At this point, you can choose to terminate the contract.
You will then usually be entitled to recover all losses that have been incurred as a result of the original buyer failing to pay the purchase price on the agreed date. This will include any shortfall between the price stated in the contract and the price you actually manage to sell the property for at a later date, together with interest on the shortfall from the agreed date in the new contract until the date that the original buyer pays the shortfall.
You will also usually be entitled to interest on any part of the unpaid price plus VAT from the date it was due until the earlier of (a) the date of entry under the resale contract or (b) the date 12 months after the agreed date under the original contract.
In addition, you can usually claim for any reasonable expenses including legal expenses incurred because of the original sale falling through, including expenses incurred in reselling the property.