Legal advice please - "Wasted costs" and house purchase

[WarChild007]

Basically friends have pulled out of a house purchase due to issues with the sale of their own property and the person they were buying from is trying to seek compensation for various costs they have paid.

Contracts were not exchanged and everyone is out of pocket.

Do the sellers have any legal right to claim costs from my friends the buyers and if so under what circumstances?

I always understood that you are liable to any costs yourself until you exchange contracts, which is why you can get liability insurance for it, but they are very sure that they can recover costs and are threatening action.

I'd be interested in any 'loopholes' that they may be aware of but normal 'joe public' like myself wouldn't be familiar with? I cant see this being the case as it would change the whole buying and selling laws in the UK or have big repercussions.

Many thanks

[Jasandjules]

No. They have no chance whatsoever of obtaining costs. There is NO sale or contract until exchange of contracts. It is one of the really annoying aspects of UK property law.

[p1stonhead]

No one has any comeback on anything prior to exchange. I would suggest the people after the money are told where to go!

[WarChild007]

Thanks for your replies.

After speaking to them further and reading the letters sent.
There were short notice dates imposed by the buyer of my friends house which were passed up the chain, I think the person my friends were buying from is suggesting that this was a verbal agreement between my friends and them. Due to this agreement they put removal people in place etc and have incurred costs.

They are referring to commercial law not conveyancy.

[Rude-boy]

Your friends should have nothing to worry about.

Often get a lot of piss and wind in these situations from people who think that they know the law. Just smile sweetly and tell them to jog on.

[ging84]

On of the stresses of buying a house i am afraid, at any point either party can walk away before exchange leaving both parties well out of pocket.
It's the way it's been for decades and seems to be little that can be done about it.
I'm sure someone who claims to be a lawyer will be along to say there was an offer and acceptance, a legal contract was formed, the person can be forced to buy the house for twice the market rate, and pay for the seller's kids to go to butlins or end up in a debtors prison, and will be able to quote some 300 year old law to prove thier point. But ask an estate agent who deals with this sort of thing day in day out and they'll tell you there's almost certainly nothing they can do.

[Jasandjules]

WarChild007 said:

There were short notice dates imposed by the buyer of my friends house which were passed up the chain, I think the person my friends were buying from is suggesting that this was a verbal agreement between my friends and them.

If they have not exchanged, nothing matters. There is no legal ground for costs in a house purchase prior to the exchange of contracts.

Your friend could inform them that in the event that any claim is lodged, they will make an application to strike it out pre-allocation and will seek their full costs in accordance with the CPR.

[PurpleMoonlight]

Jasandjules said:

WarChild007 said:

There were short notice dates imposed by the buyer of my friends house which were passed up the chain, I think the person my friends were buying from is suggesting that this was a verbal agreement between my friends and them.

If they have not exchanged, nothing matters. There is no legal ground for costs in a house purchase prior to the exchange of contracts.

Your friend could inform them that in the event that any claim is lodged, they will make an application to strike it out pre-allocation and will seek their full costs in accordance with the CPR.

As above.

You cannot purchase property other than by written contract, so any verbal agreements are unenforceable and likewise costs incurred as a result.

[LoonR1]

kapiteinlangzaam said:

UK property buying law is absolutely mental in this respect.

Surely its time for it to be over-hauled?

There are two completely processes in England and Wales vs Scotland.

The Scottish system has just as many flaws and all expense is upfront without any guarantee of having your offer accepted.

[WarChild007]

Thanks for all your replies. However I think this is aside from conveyance law and they are seeing it as a separate agreement. i.e. I agree to book the storage and removal etc on the date you set as you will then agree to exchange/complete.

It appears that they are maybe looking at breach of contract or something similar, not relating directly to the house purchase but as a separate agreement.

Or as this is part of the house buying process does it automatically come under conveyance law?

[loafer123]

WarChild007 said:

Thanks for all your replies. However I think this is aside from conveyance law and they are seeing it as a separate agreement. i.e. I agree to book the storage and removal etc on the date you set as you will then agree to exchange/complete.

It appears that they are maybe looking at breach of contract or something similar, not relating directly to the house purchase but as a separate agreement.

Or as this is part of the house buying process does it automatically come under conveyance law?

The answer is still the same. This sort of thing happens daily.

[PurpleMoonlight]

WarChild007 said:

Thanks for all your replies. However I think this is aside from conveyance law and they are seeing it as a separate agreement. i.e. I agree to book the storage and removal etc on the date you set as you will then agree to exchange/complete.

It appears that they are maybe looking at breach of contract or something similar, not relating directly to the house purchase but as a separate agreement.

Or as this is part of the house buying process does it automatically come under conveyance law?

It's incidental to the purchase of the property, for which no enforceable contract exists until they are exchanged.

[WarChild007]

Many thanks for your reassurances, I'll suggest they ignore him and see what happens.

[Rude-boy]

ging84 said:

I'm sure someone who claims to be a lawyer will be along ...

Well everyone on this thread who has even a modicum of legal training, including someone who deals with 100's of resi conveyancing transactions every year, has told the OP that their friends have nothing to fear.


The Sellers are just pissing in the wind. They are trying to make a case out of nothing. There are regular discussions like this that go on every single day of the week with people booking removals and so on well before exchange - mainly ramped up by the removals firms fwiw.

Bottom line advice is don't ever incur any costs you are not willing to lose before exchange. Out of interest I wonder if any of this guff has come from a solicitor or if it is all the frustrated seller getting all bent over.

Regardless the answer is still the same as the one Noah gave the animals once he'd tied up in the dock, opened the doors to the ark and they asked him "what next?".

[WarChild007]

Rude-boy said:

Out of interest I wonder if any of this guff has come from a solicitor or if it is all the frustrated seller getting all bent over.

Apparently the seller is a solicitor.

I like the Noah analogy! Thanks for the reply.

[PurpleMoonlight]

WarChild007 said:

Apparently the seller is a solicitor.

Even less likely it will get anywhere near a County Court then.

[Paul Dishman]

PurpleMoonlight said:

WarChild007 said:

Apparently the seller is a solicitor.

Even less likely it will get anywhere near a County Court then.

Quote them Arkell vs Pressdram

[JustinP1]

WarChild007 said:

It appears that they are maybe looking at breach of contract or something similar, not relating directly to the house purchase but as a separate agreement.

Rubbish.

They knew full well that any agreement made, oral or written will always be 'subject to contract', because is law for the sale of land it must be.

You can't enter into an oral contract to enter into a written contract. It's bunkum.

[dxg]

JustinP1 said:

WarChild007 said:

It appears that they are maybe looking at breach of contract or something similar, not relating directly to the house purchase but as a separate agreement.

Rubbish.

They knew full well that any agreement made, oral or written will always be 'subject to contract', because is law for the sale of land it must be.

You can't enter into an oral contract to enter into a written contract. It's bunkum.

Verbal form of a letter of intent?

I throw this idea to the wolves...

[JustinP1]

dxg said:

JustinP1 said:

WarChild007 said:

It appears that they are maybe looking at breach of contract or something similar, not relating directly to the house purchase but as a separate agreement.

Rubbish.

They knew full well that any agreement made, oral or written will always be 'subject to contract', because is law for the sale of land it must be.

You can't enter into an oral contract to enter into a written contract. It's bunkum.

Verbal form of a letter of intent?

I throw this idea to the wolves...

To clarify, you can't have a binding contract to enter into a separate binding contract. That's a paradox because of course if you are bound to enter into a contract, then you would be under contract from the first one and the second one would be redundant.

You can enter into a contract and leave factors of it to be decided at a later date (as unadvised as that is), however, that leaves open the situation that should the parties not agree on the factor(s) not yet decided, that it would need a court to decide the interpretation of the contract. It should be noted that the other parts of the contract would be binding, it would just be the unagreed factors to be decided.

However, as I mentioned, since all negotiations of a house sale are 'subject to contract' (i.e. formal contract exchange) anyway, and, you can only purchase land particularly in the formal written form, then this cannot occur here.