In the process of searching for the best deal, it can sometimes be necessary to pull out of existing agreements. But if you have only made a verbal commitment with someone – and nothing has been put to paper – are you still legally allowed to pull out?
Whatever your reasons for pulling out of a house sale, the legalities surrounding this subject are outlined in the blog below. Keep reading for more information.
When can I legally pull out of a house sale?
You are legally able to withdraw from a house sale at any point until the exchange of contracts. House sales fall through all the time, however, once the official exchange takes place, it becomes legally binding, and you have no choice but to honour it.
Sometimes, it can be frustrating to pull out of a transaction at the last minute, especially if several months of time and money have gone into it. Therefore, people usually do so for a clear reason – for example, because they have changed their mind about selling it or perhaps because they have received a better offer.
Do I need to give a reason to pull out of a house sale?
It is considered common courtesy to provide a reason for pulling out of a house sale. However, there is no legal requirement to do so.
If several months of time, effort, and money have gone into the process—and the other party has made commitments and/or arrangements on the assumption that the transaction goes through—then it is certainly worth giving them the decency of an explanation.
Does it cost me money to pull out of a house sale?
According to CompareMyMove, sellers can expect to pay an average of £1,315 in solicitor fees if a buyer pulls out. On the other hand, buyers pay approximately £1,655 when a seller pulls out.
This money comes from the fact that solicitors will usually charge you a fee for pulling out of a house sale. This cost will depend on how far along you are in the process—so if you are only a few weeks away from exchanging, for example, it is likely to cost you far more than if you pulled out early on.
Can I legally pull out of a house sale after exchanging contracts?
Once you exchange contracts on the sale of a house, it becomes legally binding. Therefore, if you want to pull out at any point after that, you will face financial penalties and may even be unable to do so altogether.
If the seller fails to complete the transaction, the buyer can revoke the agreement. The deposit will be returned to the buyer with interest, and the vendor is liable to pay any outstanding fees from the contract.
Sometimes, people pull out of a house sale after an exchange because new information comes to light. This might include a change in their personal circumstances or the revelation that one of the parties is committing a crime.
Can I be sued for pulling out of a house sale?
If the contract exchange has already occurred, then yes, you can be sued for breach of contract. If there has been no exchange of contracts, though, then you cannot be sued, as nothing is legally binding.
Once you pull out of a sale after exchanging contracts, you will usually be issued a ‘Notice to Complete,’ which gives you 10 days to complete the sale. During these ten days, you will also pay a daily interest rate and must return the buyer’s deposit.
If you still decide not to complete it, the other party can sue you and may even legally insist that the transaction continue. The costs that could be sued for might include accommodation, storage, property survey, building insurance, lost income (if renting), and more.
Is pulling out of a house sale common in the UK?
According to research by the website HomeSellingExpert, approximately 31% of house transactions fall through.
This can be a frustrating and demoralising feeling for everyone involved, and it also carries a degree of risk because you are not guaranteed a better deal elsewhere. Even if someone offers you a better deal, they may change it at the last minute, and you could end up worse off than before.
Can my estate agent charge me for pulling out of a house sale?
Yes, your estate agent can charge you for pulling out of a sale if they want to. Whether or not this is their policy will usually be outlined (sometimes in small print) when you start working with them, so you should check this. The fee will usually cover advertising costs and the estate agents’ time.
Some property experts suggest that an estate agency is more likely to charge you if you pull out of the sale and then switch to a new agency altogether. Pulling out of the deal could also be interpreted as damaging their reputation, which might also be a factor.
Common reasons to pull out of a house sale
Gazumping
One of the most common reasons sellers pull out of a transaction is that they have received a better offer—known as ‘gazumping’. If the offer is substantially better, this extra money may be important to the seller and sway them in the other parties’ direction.
However, this is a risky strategy for the seller because there is no guarantee that the new deal will go through or that the potential buyer won’t reduce their offer at the last minute. This could take them straight back to square one.
Personal circumstances
Another common reason is because of a dramatic change in personal circumstances. This might include someone losing their job, a loss in the family, or facing major financial difficulties (i.e. they can no longer afford upsizing into a new house).
Chain break
Property chains breaking down are particularly common reasons for someone to back out of a deal. This may have nothing to do with them, but the house they were due to be moving into is no longer available, meaning that they cannot stick to the pre-agreed moving day.
New information
If new information comes to light about the buyer that the seller is unhappy with, then this may cause them to drop out, too. For example, perhaps they are planning to demolish the existing building or have a criminal record. These are factors that may cause some sellers to get cold feet.
