Contracts signed closing set Buyers trying to pull out

Discussion in 'Mortgages and buying and selling homes' started by pc7, Jun 12, 2007.

  1. pc7

    pc7 Frequent Poster

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    Hi
    I've been reading everything posted and its been so helpful our house has been sale agreed for sometime, the buyer signed contracts and paid the 10% deposit a month ago we returned them and set the closing date for next wednesday (20th June).
    Our solicitor received a letter today saying they want to pull out and want their deposit back. He said its very unusal as no reason was even given, he said we are entitled to keep the deposit. We rang our estate agent to ask him to call to see what the situation was, the buyer wont answer his call.
    We've instructed our solicitor to write back saying no, they cannot pull out and we are closing next week. Is it true we can keep their deposit if they pull out, we are currently paying a 6 month bridging loan and if it falls through we'll have to extend it for another 6 months.
    I'm usually a very fair person in that I treat people the way i'd like to be treated, but we cannot afford for the sale to fall through and not be compensated.
    Do they have any come back on taking back their deposit? I'm sick to my stomach with worry.
     
  2. ClubMan

    ClubMan Frequent Poster

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    Your solicitor has already answered this question according to the above. Do you think that he's wrong or something?
     
  3. pc7

    pc7 Frequent Poster

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    Hi Clubman, I think I'm just terrified it sounds too good to be true, why would her solicitor write to say they are pulling out and want their money back if they aren't allowed to have it back?
     
  4. ubiquitous

    ubiquitous Frequent Poster

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    presumably on the basis that there is no harm in asking?
     
  5. pc7

    pc7 Frequent Poster

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    well hopefully that's it, in fairness if she had a really valid reason and was sick or something I'd be the type to even split the deposit with her, take enough to cover our bridging loan and give the rest back, maybe I'm too soft!! the sooner this is all out of the way the better. Much too stressful, it was hard enough when we bought our new house I thought selling would be easier! silly me!
     
  6. ClubMan

    ClubMan Frequent Poster

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    Maybe they're chancing their arm or depending on your good will. You should be guided primarily by your solicitor's professional opinion in such matters. This is what he was hired for. If he says that you are entitled to keep the deposit even if the buyer pulls out and that's what you want to do then that's what you should do. If necessary ask your solicitor again for confirmation that this is the clearly defined legal situation.

    Post crossed with the one from ubiquitous.
     
  7. pc7

    pc7 Frequent Poster

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    yeah at this rate the solicitor is earning his fee! hopefully it all just goes through. Great website this I've done no work all moring reading all the threads!
     
  8. robd

    robd Frequent Poster

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    pc7,

    It's a business transaction so try as much as possible to not take anything personally. Given recent media reporting, mabye the buyers have simply got nervous or they have mortgage trouble. As the contracts have been signed, they are in breach of contract for pulling out. Thus the 10% deposit is normally not returned. If they pulled out before signing of contract then the deposit paid to EA is refundable but that's not the case.

    Don't forget that you are liable for solicitors fees for the work done and interest for the period between accepting their offer and when it will eventually get sold so I wouldn't be feeling to bad about not giving the deposit back. It's business afterall, they're in breach and as you solictor has told you (and he's the expert on the legality of it) you are entitled to keep the deposit. No harm in them chancing their arm though.

    I belive you could try to force them to close but it's probably unlikely you would succeed given that they prob don't have the money to pay for the house.
     
  9. pc7

    pc7 Frequent Poster

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    thanks robd, i'm really hoping they are just chancing their arm and will go through with the sale. But your right they made a deal and we will be stung financially if it went belly up. Hopefully the soliticor will hear something back by the weekend.
     
  10. Ballyman

    Ballyman Frequent Poster

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    To be fair, most Vendors would give back the deposit anyway unless they were seriously out of pocket as a new buyer would be in place in a few days.

    I admit that this was the dublin market and that it has slowed somewhat so a new buyer may not be available as readily.

    Put yourself in the buyers situation and see what you would like done to you? Remember, this is a very substantial chunk of money that you have. A couple of hundred euro then fair enough keep it, but €40K or €50K+???? You can't really justify that in fairness regardless of legality. Or at least I couldn't anyway.

    I'd try to find out why they can't close, but I'd return the money to them, less your expenses, which ain't going to be much as the solicitor will have all the work done at this stage all he has to do is change a few names when you get a new buyer.
     
  11. jrewing

    jrewing Frequent Poster

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    Reading other recent threads on the costs of professional services, regardless of seemingly small nature of task, I am not sure that you can assume that this is a routine/cheap service.
     
  12. tiger

    tiger Frequent Poster

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    Also the cost of the bridging finance. Say the sale is delayed by a further 6mths, finance @ 5% (could be higher) on a €400K loan (average cost of house in Dublin) comes to about €10K.
     
  13. gipimann

    gipimann Frequent Poster

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    I have to say that although it sounds petty, I'd be holding on to the deposit as the solicitor advised. After all, if you in turn had put a deposit on a property, and had to pull out of your own deal because of your buyer walking away, you're likely to lose your own deposit, incur legal charges and have to start all over again with your house sale.
     
  14. rmelly

    rmelly Guest

    not sure there is much legal basis for 'if'...
     
  15. Bronte

    Bronte Frequent Poster

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    If you are entitled to the deposit then keep it, it's nothing to do with morals. I'm amazed at the people on AAM who are willing to give other people's money away - I've never met their type in any business dealings - and selling a house is serious business. Buyer beware etc. They shouldn't have agreed to purchase if they didn't intend to follow through, you can't just change your mind about something as substantial as a house.

    Also bear in mind that your costs are the solicitor's fees, the auctioneers fees, the ongoing bridging loan finance which you now have no idea how long it will take to sell. Could be today or it could be a year... Another thing to count is your time and stress. Plus when you start feeling sorry for the purchaser remember that you may now have to drop the selling price. - another thing to factor into your losses. You've also lost out by going with this particular purchaser because you may have had an alternative purchaser that is now not interested and things have changed in the property market - in that it's now apparently a buyers market. Finally the deposit may help you to drop the selling price to get a quick sale in order to stop paying bridging finance.
     
  16. csirl

    csirl Frequent Poster

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    Whats the point in having a 10% refundable deposit if its not going to be honoured.

    If you are buying a house, you dont pay any deposit which you dont expect to lose in the event of pulling out.

    If you are selling a house and dont want to keep any 10% deposit, then set the deposit at a lower level if you want to, but have it in the legal paperwork and dont moan if you are out of pocket due to a sale falling through.

    Deposits serve to keep the marketplace honest. Without them, many people would be wasting everyones time & money going sale agreed on houses they are not 100% sure they want to buy. They should always be honoured by both parties for ethical reasons.

    If you dont honour them, you risk being seen as a soft touch by your estate agent. A relative of mine, who is too kind hearted, makes the mistake of refunding deposits to sale agreed purchasers (they all always have a hard luck story). Net result is that a year on, his house is still for sale, he's lost a couple of houses he wanted to buy and he's lost quite a few possible purchasers who were told that bids werent being accepted as sale agreed. My theory is that the estate agent, knowing he's a soft touch and wanting to look like they are doing a good job, has been encouraging bidders to permaturely go sale agreed on the basis that my relative will refund anyway, so they've nothing to lose. He's had 7 "sale agreeds" with 10% deposits paid since last October - all fallen through & house still on market for less money than few months ago.

    The other thing I'd advise is cash the 10% deposit cheques immediately - only way of knowing if they are genuine. And dont put the "sale agreed" sign on house until you have confirmed that the cheque has cleared and cash is in your account. There is a practice of keeping the cheques and not cashing until the sale is close. Any idiot can write a cheque for any amount, but its not worth the paper its written on unless you are able to cash it. I suspect in my relatives case above, many of the deposit cheques would probably have bounced if he had cashed them immediately. If deposit cheque bounces, you know the sale is doomed.
     
  17. lissard

    lissard Frequent Poster

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    Your buyers have signed a legally binding contract to purchase your house. If they wish to back out they lose the deposit - it's very simple really. I wouldn't tolerate these people dicking you around.
     
  18. mf1

    mf1 Frequent Poster

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    Its a 10% Non Refundable deposit. Vendor does not get the money. Money stays with Vendors Solicitors - they hold the money as stakeholder until the deal is complete. Some Contracts/Closings collapse because the Vendors do not want to or cannot complete for all kinds of reasons and in those circumstances the money will be refunded.

    And yes, deposit cheques should be cashed when contracts are signed by both parties and the deal is on.

    mf
     
  19. money man

    money man Frequent Poster

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    I would obviously do as the solicitor says. Keep the deposit. Then keep a record of the cost of bridging loan until you arrange for a new buyer (if they do not complete before the 20th), added legal fees for doing all the legal work a second time and the reduction in price of the already signed agreed price as per the contracts and the next sale price that you eventually agree with the new purchaser. Then i would instruct your solicotor to sue for losses/damages for breach of contract. I would ask your own solicitor if this is possible/workable first. Im sure they will confirm it is the case.
     
  20. KalEl

    KalEl Guest

    Look at this purely as a business decision. You've received professional advice confirming that you are entitled to keep the deposit. There are no other relevant issues, moral or otherwise. For whatever reason these people have wasted your time and money. They knew the consequences of pulling out of the deal after contracts were signed and must live with that. Hopefully this money will help you in your situation to sell the house and get your own situation consolidated. As another poster suggested, they are chancing their arm and looking for the one mug who would give them back their deposit out of some misguided sense of "fair paly".
    Best of luck