Trading up and fall-trough scenario

Archip

Registered User
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You are trading up, selling a cheaper property for 100K, and buying a more expensive one for 200K. You are dependent on the funds generated by the sale.

You sign contracts with the buyer and seller, after which you become legally bound and have to pay 10% of the purchase price if you pull out, same applies to the buyer. If the sale falls though because of your buyer pulls out (i.e. this isn't your fault by any means) you end up with -10K balance (20K have to be payed to the seller, 10K the buyer's deposit).

I heard the situation is rare but the money is involved and we need to understand how to deal with this. Is trader-up always exposed and it's just an acceptable risk for them?

Can breakage fees be mutually suspended or how to minimize the risks otherwise?
 
Talk to your solicitor about how to deal with such a scenario, and what protections can be put in place.
 
Hi Archip

Just to be clear. You are contractually bound to complete the sale to purchase the house for €200k. You can't just walk away and forfeit the deposit.

The seller of the €200k house can take legal action to force you to complete the sale.
Likewise you can take legal action to force the buyer of the €100k house to complete the purchase.

That is the legal position.

And yes, it is a risk which is why your solicitor will not let you sign a contract to buy until you have a signed contract to sell. That only minimises the risk but does not eliminate it.

The practical position
There is probably no point in you suing the buyer to complete the sale. But if he has just had a change of heart , then your solicitor should write to your buyer and insist on closing.

In practice, you will need to notify the person you are buying from that there will be a delay in completion and you will do your best to complete as soon as possible.

But your house back on the market and you can afford to take a lower price.

Brendan
 
Talk to the estate agents operating in the area you're looking to buy in. In some areas, agents will not accept a bid from a purchaser who needs to sell a property to pull the finance together.
 
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