Seller pulled out after exchanging contracts
Q. In February 2022, we exchanged contracts on a property. However, unfortunately, our solicitor had to serve a notice to complete to our vendor. It became apparent she had not arranged an appropriate mortgage offer for her onward purchase.
We were in a short chain of four parties. Everyone dutifully waited and hoped our vendor could organise her mortgage affairs in time. But due to her age, the type of mortgage she had (equity release), and the fact she was buying a listed property, she failed to obtain a mortgage offer in the timescale. The house she was trying to purchase has now been put back on the market.
Our solicitor explained this was extremely rare – but it has happened. Now, we have lost approximately £3,000 on conveyancing fees and surveys through no fault of our own. Our solicitor has suggested a litigator we can use to write a letter of intent to the vendor. However, he noted that she can choose to ignore it.
Our vendor signed a legally binding contract and we want to pursue her for the money we have lost. But we are so unsure as to whether to pay even more on litigation costs if realistically she can choose not to engage with us.
We feel the situation is so unfair. If we had pulled out of the purchase, we would have lost our deposit. Yet it appears our vendor can walk away from her legally binding contract without paying us any financial compensation.
A. I concur with your viewpoint that, at first glance, it appears unjust. If, as you assert, you had failed to fulfill your obligations, you would have forfeited your deposit, yet there is no straightforward recourse for seeking compensation from a seller who refuses to fulfill their obligations.
Undoubtedly, you would have a legitimate claim against her for the losses you incurred. You could certainly seek reimbursement for expenses related to the unsuccessful conveyancing process, survey fees, and similar costs.
In theory, you could also pursue what legal professionals refer to as “loss of bargain.” Essentially, if you have purchased or intend to purchase another comparable property at a higher price, you can claim the difference between the amount you paid for the property you actually purchased and the amount you would have paid for the one where the seller did not fulfill their obligations. However, such claims are challenging, as you would need to demonstrate that the properties are indeed comparable.
I understand that you are reluctant to bear substantial legal expenses, and to simplify matters, it might be prudent to limit your claim to the fees incurred during the unsuccessful transaction.
If you prefer not to engage solicitors, you have the option of filing a claim in what is commonly referred to as the “small claims court.” In reality, it is the standard county court, but any claim under £10,000 is handled under the small claims track, wherein the prevailing party does not recover legal costs from the losing party (which is the typical rule in litigation).
Certainly, you should send a comprehensive letter detailing your claim along with evidence of the losses to the seller. If she refuses to make the payment, then you can initiate legal proceedings against her. The most straightforward method for doing so is by using the “money claim online” procedure.
Of course, if the seller has indeed sold her house and relocated, you may encounter difficulties in locating her. Moreover, even if you succeed in your claim and obtain damages, there are always challenges in enforcing any court order for payment of money.
Assuming she does own a property (whether it is the one she intended to sell to you or another property she has since purchased), you can apply for what is known as a charging order against the property. This means you would recover your money when she sells or refinances the house.
This is a legal overview, not legal advice, you must always seek professional advice before deciding on a course of action.