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Pulling out of purchase

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  • Pulling out of purchase

    Hi I decided to buy a new property last year and was told it wold be ready for end of novermber I thus paid the deposit at the end of October last year. The property has not been completed and was told late January now it is going to be May. Am I right in understand that after 6 months of paying the deposit of £5350 I can withdraw from the purchase and claim this money bank also the reservation fee of £500. My Solicitor sort of gave me the idea I could if the property was not competed by the end of March this year but would like to pull out earlier. Briefly it seems the developer invested in Icelandic banks and is now being run by adminstrators. There is slow progress on the building but not enought to finish before end of March. This property is a one bedroom apartment in a new block and advise would be very helpful

  • #2
    Re: Pulling out of purchase

    If you have exchanged contracts, then it depends on what "longstop date" (if any) was included in the contract
    This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

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    • #3
      Re: Pulling out of purchase

      Thanks for the info Justin the contracts have been exchanged I called the developer today and was told if I pull out before end of March then I am in default of the contract. However the did confirm the property would not be completed to april/may. I don't have a copy of the contract that was signed but do have a draft contract which had the comppletion date day and month left empty however the year was 2009 so wondered if that on its own was enough to make the contract void? thanks for your advice

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      • #4
        Re: Pulling out of purchase

        Your conveyancer will have a completed copy of the contract that you can check.

        If the builder says the deadline is the end of March but knows the property will not be ready by then, why is he being so bloody-minded about releasing you from the contract early? Perhaps he hopes he will, in fact, finish in time, or that you will change your mind or will fail to exercise your right to rescind properly. I therefore suggest you speak to your conveyancer without delay, so they know what you plan to do and can check what timescale has to be complied with and prepare the paperwork in readiness
        This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

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        • #5
          Re: Pulling out of purchase

          Thank you Justin for your advice I had a meeting with the director of the company that is constructing the apartments. He confirmed that the long stop was end of March and would not accept a pull out before then. Basically the company is being funded by a Bank as I believe they are in administration. My conveyancer is back on Monday so hope to be updated I hope that the reservation fee will be refunded along with the deposit and I believe as they will be defaulting on the contract end date I could claim interest on those payments? not too sure?. The also had a deal where they paid a part of the conveyance fee so not sure if I will have to pay the cost now. The construction company has also confirmed that the property will not be finished until its handed over competed at the end of May. many thanks for your help its very much appreciated

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          • #6
            Re: Pulling out of purchase

            No problem. I'm pleased to have been able to help. BTW: I think you should get interest on the deposit money and the reservation deposit should be returned, but I doubt you will get the contribution towards your legal expenses as originally agreed. You *might* be entitled to compensation (ie: wasted expenses) due to breach of contract, but it depends on the wording of the clause entitling you to pull out
            This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

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            • #7
              Re: Pulling out of purchase

              Thanks Justin have noted your valued points and when the time comes will hope to try for that. Rather disappointly have been told that the deposit would have to be refunded from the NHBC and would be a drawn out process. Not sure but could this be as the developer is in administration and being funded by a bank that is being run in adminstration too?. It does seem mean as it took sometime to save up for the deposit and yet the developer must of been aware of their suituation and yet assured us over and over it would have been completed in time. What seemed a safe purchase seems to be just an expensive loss. Cheers for the help!

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              • #8
                Re: Pulling out of purchase

                I will be interested to hear how quickly and easily NHBC refunds the deposit - please post details here, if you would
                This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

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                • #9
                  Re: Pulling out of purchase

                  Hi Justin, have an update but seems its not good news. The NHBC will not refund the deposit paid as the developer (in administration) will complete the property at the end of May. Our longstop date was end of March, it seems if we recind the contract now the deposit monies from ours and other buyers that don't want to complete will be put into a pool which I guess is for a the creditors that are owed. Although our solicitor has tried for us and other buyers the developer solicitor will not respond as to refunding the deposits our advice for now seem to be just to wait. I just find it amazing that this can happen the developer failed to meet the contract and seems to be getting away from returning the deposits of many buyers just because they are in administration. rgds

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                  • #10
                    Re: Pulling out of purchase

                    That is certainly not good news! How does the NHBC justify not refunding the deposit if, contractually, you are entitled to withdraw and to the return of the deposit? Is NHBC basically saying, "We make the rules, and you must allow the developer more time if we say so"?
                    This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

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                    • #11
                      Re: Pulling out of purchase

                      Hi Justin thank you again for your reply and info I have pasted the reply from the solicitor that is acting for the purchase. I think I will indeed contact NHBC myself we can rescind the contract as the longstop was end of March but not sure what to do for the best. Rgds Andy


                      The development is registered with the NHBC. That organisation provides protection against the developer going into liquidation, the development not going ahead and the deposits being lost or where the administrator disclaims the contract. From the information which I'm receiving at the moment, it would appear that the properties will be completed. The administrator is unlikely to rescind the contracts. More likely, the administrator will wait until the development is well progressed and then serve notice on the various parties who have exchanged contracts requesting completion. It would still then be open to you to rescind the contract as the long-stop date has passed.

                      The NHBC is unlikely to become involved as the most likely scenario is that the administrator will allow the development to complete so that the existing contracts can be honoured.

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                      • #12
                        Re: Pulling out of purchase

                        I see the point: NHBC will pay out is the developer goes bust or if the administrator disclaims the contract, but apparently not if you choose to rescind the contract - you would have to try to recover the deposit as an ordinary creditor then

                        I cannot see how, if the property is physically completed and the developer serves notice requiring completion, you can then rescind; you would first need to make time of the essence by serving a notice to complete - but maybe that has already been done - and in any case you would still have the problem over the deposit

                        A nasty situation to be in: I need to update my advice to clients about paying deposits to developers!
                        This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

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                        • #13
                          Re: Pulling out of purchase

                          A lot of developers go bust and we only realise this later when we have to settle a dispute, only to discover that the new owner of the development is different!

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