Breaking contracts- what happens ?

M

Mixednuts

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Always wanted to know what the position is if either buyer or seller pull out of a contract that has been signed for the sale/purchase of a house.

anyone?
 
Does the buyer have any clauses?

When we bought our house it said we could pull out if we couldnt get the mortgage money drawn down without losing our deposit
 
All solicitors use the Law Society 2009 Particulars and Conditions of Sale which set out the penalties for either if they fail to complete.

In addition, it is quite common these days to insert an additional clause in the contract saying that the entire transaction is based on the premise that if the purchasers lender does not issue the loan cheque, that the entire transaction can be set aside.

I've seen conditional contracts recently with a clause stating that if the entire transaction does not conclude by end December ( this is for the Mortgage Interest Relief benefits) it will be set aside.

Ultimately, these clauses depend on the relative positions of the parties and what makes most sense if there is a breach.

mf
 
yea I have seen similar clause but what happens if one of the party just doesn't want to proceed.

does the seller get to keep the deposit if the buyer pulls out?

does the buyer still get to move into the house if the seller tries and pull out?
 
It would be easy enough for the buyer to "invent" some financial trouble to stop the loan check being issued.
There have been a few cases of sellers changing their mind that I've heard about. My understanding is that technically you could force them to sell after the contract is signed, but it could be costly and or time consuming.

@mf1, it'll be interesting come January to see how many of this MIR contracts actually do get set aside.
 
Mixednuts said:
yea I have seen similar clause but what happens if one of the party just doesn't want to proceed.

does the seller get to keep the deposit if the buyer pulls out?

does the buyer still get to move into the house if the seller tries and pull out?
Click to expand...

Its important that people understand that Contracts are serious and binding and that there are significant penalties/consequences if " one of the party just doesn't want to proceed." That choice is really not an option.

A person should not sign Contracts if they do not understand the consequences. It is possible that a prospective purchaser will lose their deposit or be sued. Equally a vendor may be sued for Specific Performance.

I'm interested in the idea that having signed contracts, someone could "just" change their mind!

mf
 
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