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5 Buying and Selling Property

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1. Introduction

2. Dealing with estate agents

3. Offers, exchange of contract and completion

If you are buying and you make an offer for a particular house or flat, you should make sure the offer is 'subject to contract'. This means that you can pull out of the deal if, for example, a survey shows up a defect though it can be for any reason. The estate agent may ask you for a small deposit at the offer stage. As there is little advantage to the seller in getting a deposit, you should refuse to pay anything except a small sum. You should get confimation in writing that you will be refunded the full deposit if the sale doesn't go through, for whatever reason.

Once the contracts for the sale have been signed and exchanged, the buyer and the seller are legally committed to the sale and cannot pull out. Contracts are exchanged by their solicitors or conveyancers (conveyancers deal with the transfer of ownership of a property). At this point, the buyer will usually pay 10 per cent of the price they have agreed with the seller. If the buyer fails to complete, they can lose this money.

The sale is complete when the buyer pays the rest (the balance). The seller must then move out. If either of these things does not happen, a solicitor may serve a 'notice to complete' and take legal steps to make sure the sale goes through without further delay.

Dealing with 'gazumping'
Gazumping is when a seller, after agreeing to sell to one buyer, but before exchange of contracts, accepts a better offer from another person. This can cause a lot of inconvenience and misery. In the same way, if a buyer reduces their offer ('gazundering') before the contracts are exchanged, the seller can do nothing to get a higher price if they still want to go ahead with the sale to that buyer.

If your offer to buy has been accepted, you might be able to prevent gazumping if you can persuade the seller to sign a 'lockout agreement'. This means they will not sell to anyone else as long as the contracts are exchanged within a set time. This may be in exchange for a sum of money which is taken off the purchase price if the sale goes through. Another possibility is a 'pre-contract deposit agreement'. This means that each side pays a deposit that will be lost if they pull out without a good reason. You should use a solicitor to draw up agreements like these.

The Home Information Pack
The Government is introducing a new law which will mean that the seller (or their agent) must prepare a Home Information Pack before putting their property on the market. This will have to contain information about the property which at the moment the seller has to give only after they accept the offer. The information would include a Home Condition Report, which is broadly similar to a survey. The scheme is meant to speed up the selling process, but the new law will not make the seller any more responsible for providing accurate information than at present. The new law will come into force in June 2007, though some estate agents will be offering Home Information Packs for sellers who would like to use them before then.  The government has set up a website with more about Home Information Packs - see 'Further help' for the address.

 

4. What the price should include

5. Problems with solicitors and conveyancers

6. Problems with the survey

7. Buying a newly built home

8. Leasehold, freehold and commonhold properties

9. Mortgage and money problems

10. Neighbour disputes and anti-social behaviour

11. Further Help

12. About this leaflet







This leaflet was written by the Legal Services Commission (LSC). It was written in association with Shelter.

Leaflet Version: April 2019




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