Failure to complete on a Conveyancing transaction

Conveyancing often has an “exchange” date and a date of “completion”.  Sometimes these are on the same day, but more often there is a period of time between the exchange of contracts and the completion date. Make sure you know the latest conveyancing rules that rolled out.

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In English Law it is the date of exchange that is the first stage of the legal obligations, and this sets out the obligation to go on to complete the sale or purchase.  It also sets out what is to happen if, for any reason, the contract is not completed. Our conveyancy fees moving house explained is also a good read.

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Failure to complete

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A failure to complete on the contractual date set in the contract is a breach of the contract. This means the innocent party may be entitled to damages for loss unless there is a valid reason for failing to complete.

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If you wish to claim damages you must serve a notice on the defaulting party’s solicitors. There is normally a fee to pay by the defaulting part to cover the solicitor’s costs in preparing and serving the notice. so the pesron who has breached the contract would be expected to pick up this cost

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What are the typical terms?

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There are standard terms on which the vast majority of property transactions are completed (subject to appropriate variations depending on the nature of the transaction).  The standard terms are that:

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Late completion (i.e. the completion is delayed but still goes ahead)

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If there is default by either or both of the parties in performing their obligations under the contract and completion is delayed, the party whose total period of default is the greater is to pay compensation to the other party.

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Compensation is calculated at the contract rate on an amount equal to the purchase price, less (where the buyer is the paying party) any deposit paid, for the period by which the paying party’s default exceeds that of the receiving party, or, if shorter, the period between completion date and actual completion.

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The defaulting party will (usually) have 10 days after notice has been served to complete. If this is not met the following apply:

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Buyer’s failure to comply with notice to complete

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The Seller will serve notice on the Buyer that they require the Buyer to complete the purchase.  If the Buyer does not do so (typically due to a lack of funds) the seller may rescind the contract, which means that the contract is withdrawn.  If this is the case, the Seller may retain the deposit already paid to him.

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There may be instances where the Seller may not keep the deposit, such as if there was a significant latent defect with the property which had not been properly disclosed.

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Seller’s failure to comply with notice to complete

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Sometimes it is the Seller who changes their mind or is unable/ unwilling to complete the sale.  If the seller fails to complete in accordance with a notice to complete, the buyer may rescind the contract and the deposit (with interest) is repaid to them.

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If you require any further information on dealing with a failure to complete, please contact a member of the property team at Edward Hands and Lewis.

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Sources:  Standard Conditions of Sale