Buying and selling property can often be a long and complicated process with many legal and financial hurdles. But, when a buyer is interested in and puts in an offer for your property it can seem like the hardest part of the process is over. Nevertheless, sometimes buyers do get cold feet and pull out of offers. This can be for a multitude of reasons including a change of personal circumstances or even a failure to arrange a mortgage. Your rights as a seller and the options which are available to you in this situation depend on whether contracts have been exchanged.
Exchange of contracts is when both the buyer and seller enter into a legally binding agreement to transfer title deeds on a mutually agreed completion date. As this is a legal agreement, if either party decides to withdraw or pull out they will face serious financial and legal consequences.
However, if contracts have not been exchanged and a buyer pulls out, your options as a seler are limited. It is likely that you will incur financial losses as you will have to drop your original asking price when putting their property back on the market in the hopes of attracting a new buyer. You will also still have to pay any conveyancing and surveying fees and due to a lack of binding contract, you will not be able to take any action against the buyer to receive compensation for these costs.
Fortunately, if contracts have been exchanged and the buyer still pulls out, you have a more firm and direct course of action available to you. Formal notice will be given to the buyer to complete within a period that is normally between 10 days to a fortnight. During this period the buyer will have to pay interest to you on the amount of purchase money which is not sent through. If the buyer still fails to complete within this period you may rescind contracts and the buyer forfeits the deposit to you.
Additionally, you are able to take the buyer to court and sue them for any losses which you have made as a result of their unforeseen withdrawal. This is because they have breached a legally binding agreement. One loss which you are able to claim may be the aforementioned dropping of asking price when putting your property back on the market. The losses which you can claim may be set out in your contract as standard but the party who did not pull out after exchange retains other rights and remedies. This means that as a seller in this situation you can also sue for a plethora of other losses which you make as a direct result of breach of contract. These include: conveyancing fees, mortgage costs, survey costs and even removal costs.
In this way, although it is rare, if a buyer pulls out there are options at your disposal that will allow you to recover.
