The process of moving, buying, or selling a house is one of the most stressful experiences a person can go through. From arranging viewings to applying for mortgages, the last thing you want is the added pressure of your buyer or seller pulling out of a house sale. However, sometimes it is necessary.
In this article, we will be looking at how to pull out of a house purchase, what it means for you as either the buyer or the seller, and what happens after you pull out of a house purchase.
Looking for a quick answer? Check out our drop-down menu below!
- Can I Pull Out Of A House Purchase Before An Exchange Of Contracts?
- Can I Pull Out Of A House Purchase After An Exchange Of Contracts?
- How To Pull Out Of A House Purchase
- Can I Pull Out Of A House Purchase In Scotland?
- How Much Does It Cost To Pull Out Of A House Sale?
- Pulling Out Of A House Purchase As A Buyer
- Pulling Out Of A House Purchase As A Seller
- Why Do Buyers Change Their Minds?
- How To Pull Out Of A House Purchase
- Can You Pull Out Of The House Purchase On Completion?
Can I Pull Out Of A House Purchase Before An Exchange Of Contracts?
If contracts have not yet been exchanged then you are free to pull out of a house purchase with relatively few repercussions. If you are pulling out of a house sale, this is good news as they have not been exchanged, there is no legal obligation for you to continue with the purchase if you do not wish.
Can I Pull Out Of A House Purchase After An Exchange Of Contracts?
If you wish to pull out of a house purchase after an exchange of contracts, you must be aware of the repercussions that you may face.
The further along you are in the house buying process means the more costly and time-consuming it will be to pull out. Some of the financial implications that you can face when pulling out of a home purchase include:
- The buyer may lose out on their deposit
- The party at fault can potentially be taken to court in order to cover losses
- Both of the parties may lose out on non-refundable costs, such as conveyancing costs
How To Pull Out Of A House Purchase
There are several reasons why someone may want to pull out of a house purchase, and if it is the route that you have chosen to go down, whether you are a buyer or a seller, you will have to notify your conveyancing solicitor. From there, your conveyancing solicitor will notify the other parties involved and will advise you on the next steps to take in order to successfully terminate the sale.
Please be aware that if you are pulling out of the purchase after exchanging contracts, you may be fixed with a ‘notice to complete’. A notice to complete is a legal notice that the party who has pulled out of the sale is given a ten-day period of grace to complete the sale. The party that receives the notice is also liable to pay interest which is calculated daily to the other party.
It is also worth noting that regardless of which side issued the notice, both sides must be willing to complete the sale within 10 days, and if one side is unable to complete then they will be in breach of contract, even if they did not issue the notice.
Can I Pull Out Of A House Purchase In Scotland?
Whilst in England and Wales it is not easy to pull out of a house purchase, there are different rules when it comes to house sales and pulling out of them in Scotland. In Scotland, you can pull out of a house purchase as long as missives have not been concluded.
If missives have been concluded then you will be unable to pull out of the house purchase. This is because there is an exchange of letters between the buyers and seller’s solicitors. As part of this process, the seller will usually agree to a number of conditions and this will be accepted as a ‘qualified acceptance’ of the buyer’s offer.
These letters are known as ‘missives’ and either the buyer or seller is free to pull out of the house purchase until they reach the ‘qualified acceptance’, at which point the missives will be concluded. Once this happens, neither party can pull out.
How Much Does It Cost To Pull Out Of A House Sale?
When pulling out of a house purchase, it is inevitable that some costs will be incurred. In England and Wales, it will be the seller who incurs the most losses. This is not the case in Scotland, where it is the buyer who tends to lose the most money.
If you are serious about purchasing a property, it is always a good idea to know you can afford it before you put an offer on it.
Because of this, it is a good idea to get a mortgage in principle agreed upon before you put any offers on the house.
Various surveys have found that more than half of buyers racked up costs of over £2700 when someone pulled out of a house sale. However, for 12% of those sellers, they were left out of pocket by £5000.
As well as pulling out of the sale, the house seller can also incur fees from searching for another property to buy which they will then probably have to pull out from.
If the seller does pull out, then the buyer can claim:
- Their conveyancing costs
- The mortgage administration costs
- Their property survey costs
- The cost of any searches
- Any building insurance costs
Pulling Out Of A House Purchase As A Buyer
If you feel that after you have exchanged contracts with the seller you can no longer go through with the purchase, as the buyer you must understand that:
- The seller will be within their rights to end the contract
- The property seller will be entitled to keep the deposit that you paid
- The seller will then be free to resell the property and any of the contents that have been agreed upon in a contract
- The property seller will also be able to claim damages from the buyer pulling out
- The seller can also claim for any potential losses they may have faced, such as market deprecation in the property’s value
Pulling Out Of A House Purchase As A Seller
If when the exchange of contracts has taken place and as the seller, you decide to pull out of the purchase, you need to be aware that:
- If you fail to complete the sale, the buyer can claim a daily rate of interest for the notice to complete
- The buyer can now also claim the original deposit back
- The buyer must return any documents they have received to the property seller – and the seller must pay this expense
Why Do Buyers Change Their Minds?
There can be any number of reasons why a buyer may want to pull out of a house purchase. Some reasons are:
- A Poor Survey – If the survey comes back on the new house revealing problems that were not disclosed on the TA6 property information form, a buyer may pull out
- Negative Results On A Search – If a search unveils new planning applications for the area that will change
- Financial Issues – The buyer may not be able to secure the mortgage they need
- Change In Personal Circumstances – The buyer may suffer a personal illness, divorce, sudden death in the family, or relocation
- Legal Issues – Title problems or boundary disputes
- Chain Problems – The buyer’s own home sale may fall through
- Changed Their Mind – Sometimes buyers may simply have a change of heart about the move and pull out of the purchase
Can You Pull Out Of The House Purchase On Completion?
Someone trying to pull out of the house purchase during completion is rare, however other complications may arise that can further delay the moving process. It could be a relatively simple issue that delays the time you can move in, or it could be an issue that ends up halting the entire transaction altogether.
When you reach the date of your completion, there are 3 main elements that can have an effect on the speed of your transaction:
- 1. The speed that the buyer’s solicitor transfers money to the seller
- 2. The speed at which the mortgage lender gives money to the buyer’s conveyancer
- 3. The seller or the estate agent handing over the keys
If issues occur during any of these steps, it can result in the process being delayed. For smaller issues it may only push back moving by a couple of days, larger issues can result in the entire sale falling through.
If either the buyer or the seller intends to pull out at this stage of the house buying process, then a notice to complete will be sent to those in breach of contract. If the completion date is then delayed, then it is possible for the party not at fault to claim back for any financial loss. If the buyer is not the one who sent the notice, then it will be possible for them to claim their deposit back.
The costs that can be claimed back include:
- Mortgage interest
- If the party is renting, they can claim for lost income
- Property survey
- Building insurance
This just about covers everything you need to know regarding how to pull out of a house purchase. If you have questions, queries, or insights into the topic, please feel free to get in touch!
Alexandra is a junior content producer who enjoys writing articles and finding out more about the property market.