buying/selling houses
Discussion
Just having a thought about "gazumping". If the parties involved signed a contract agreeing to accept a price unless extenuating circumstances occur (eg redundancy) and breaking the agreement would result in the buyer having all costs paid for (eg surveyor fees), would this be legal in protecting the buyer against being gazumped?
It is entirely legal (and in my business common) to exchange conditional contracts. The conditions, however, are usually easy to police as they are a matter of fact. Such things as planning permission, the signing of an agreement to lease, local authority confirming a new road and such like.
Clauses in contracts that are not de facto are notoriously difficult to enforce. Banks have a common "material adverse change" favourite in some finance facilities. Bloody difficult to enforce.
It would be easy for a non-corporate punter to fudge something like redundancy. Also what security would you have for costs. Are you going to sue someone who reneges?
A good idea but difficult in practice.
Edited to say that Roadrunners' 1k mergeable but non-refundable can work well. We use stuff like that quite a lot.
>> Edited by DavidP on Thursday 28th November 17:29
Clauses in contracts that are not de facto are notoriously difficult to enforce. Banks have a common "material adverse change" favourite in some finance facilities. Bloody difficult to enforce.
It would be easy for a non-corporate punter to fudge something like redundancy. Also what security would you have for costs. Are you going to sue someone who reneges?
A good idea but difficult in practice.
Edited to say that Roadrunners' 1k mergeable but non-refundable can work well. We use stuff like that quite a lot.
>> Edited by DavidP on Thursday 28th November 17:29
Just having a thought about "gazumping". If the parties involved signed a contract agreeing to accept a price unless extenuating circumstances occur (eg redundancy) and breaking the agreement would result in the buyer having all costs paid for (eg surveyor fees), would this be legal in protecting the buyer against being gazumped?
Nope. Nothing in Pre Contractual negotiations of property is valid, and there is NO LEGAL LIABILITY until contracts have been exchanged. It sucks. Unless you are in Scotland of course.......
Jason F said:
Just having a thought about "gazumping". If the parties involved signed a contract agreeing to accept a price unless extenuating circumstances occur (eg redundancy) and breaking the agreement would result in the buyer having all costs paid for (eg surveyor fees), would this be legal in protecting the buyer against being gazumped?
Nope. Nothing in Pre Contractual negotiations of property is valid, and there is NO LEGAL LIABILITY until contracts have been exchanged. It sucks. Unless you are in Scotland of course.......
Unless I've missed the point, shadow said "signed a contract"
Just having a thought about "gazumping". If the parties involved signed a contract agreeing to accept a price unless extenuating circumstances occur (eg redundancy) and breaking the agreement would result in the buyer having all costs paid for (eg surveyor fees), would this be legal in protecting the buyer against being gazumped?
Work out the contract you want, and make that a pre-contract contract. Best idea is a non-refundable deposit in the case the other party pulls out, but you may need to allow explicit conditions where the deposit is returnable, e.g. surveys finding material faults, etc.
Better still, move to Scotland... just moved, and both buying and selling went from proposal to binding contract inside a week.
DavidP said:
Unless I've missed the point, shadow said "signed a contract"
I read that to mean as in a contract that is NOT a home purchase contract i.e. a Contract to lock into a price to purchase the house to avoid being gazumped. And my advice stands. No other contract or pre-contractual negotiations is/are valid. The contracts that are exchanged are the only thing that count. Once they have been exchanged they are legally enforceable. I could make someone sign a contract the second they accept my offer in England that says they will pay me the value of the house should they fail to sell it to me for any reason. It would not be legally binding.
Jason F said:
DavidP said:
Unless I've missed the point, shadow said "signed a contract"
I read that to mean as in a contract that is NOT a home purchase contract i.e. a Contract to lock into a price to purchase the house to avoid being gazumped. And my advice stands. No other contract or pre-contractual negotiations is/are valid. The contracts that are exchanged are the only thing that count. Once they have been exchanged they are legally enforceable. I could make someone sign a contract the second they accept my offer in England that says they will pay me the value of the house should they fail to sell it to me for any reason. It would not be legally binding.
Um, how to put this nicely, bollocks, mate. A contract is binding if it is correctly legally constructed - it binds the parties to the agreement they entered into. Subject matter is for the agreement of the parties. A contract to actually sell/buy a house is just one form of a contract. (Subject to certain rulings like unfair contracts, etc). A pre-contract contract is binding if the parties agree and sign it, and its correctly constructed.
In England & Wales, a general principle in law is that a contract cannot be binding until something (eg money) has changed hands - the seller can't be contractually obliged to sell you a house until you've paid him/her something - ie a deposit of some sort. Hence the example above with the non-refundable deposit - if £1k is enough to motivate the seller, in the face of a £manyk gazumping offer.
In Scotland, you can have a binding contract with no material exchange. If you breach the contract the consequences could be very expensive indeed, in the case of a house you'd have to pay all the other party's consequent costs - which is why gazumping is almost unheard of.
In Scotland, you can have a binding contract with no material exchange. If you breach the contract the consequences could be very expensive indeed, in the case of a house you'd have to pay all the other party's consequent costs - which is why gazumping is almost unheard of.
JohnL said: In England & Wales, a general principle in law is that a contract cannot be binding until something (eg money) has changed hands - the seller can't be contractually obliged to sell you a house until you've paid him/her something - ie a deposit of some sort. Hence the example above with the non-refundable deposit - if £1k is enough to motivate the seller, in the face of a £manyk gazumping offer.
In Scotland, you can have a binding contract with no material exchange. If you breach the contract the consequences could be very expensive indeed, in the case of a house you'd have to pay all the other party's consequent costs - which is why gazumping is almost unheard of.
Correct. There are three necessary elements to a contract in this country
1. Offer
2. Acceptence
3. Valuable consideration (or what you are calling the deposit, although it doesn't necessarily have to be a cash consideration)
To my knowledge There is NO legal obligation in a Conveyance until Contracts have exchanged. Unless you know more that this. Land Law is NOT CONTRACT LAW. In land you can purchase as a Fee simple absolute in possession, a term of years absolute, you can imply a trust.. All manner of things as per
S2 Law of Property Act (Misc) 1989
S54(2) LPA 1925
Where do you get your information from that a contract is a contract is a contract even if it involves Propert?
>> Edited by Jason F on Friday 29th November 14:09
S2 Law of Property Act (Misc) 1989
S54(2) LPA 1925
Where do you get your information from that a contract is a contract is a contract even if it involves Propert?
>> Edited by Jason F on Friday 29th November 14:09
Gassing Station | General Gassing [Archive] | Top of Page | What's New | My Stuff