Can A Property Sale Fail After Contracts Have Been Exchanged?

Spring is typically a busy season for both buyers and sellers, something that has only magnified over the past few years as property prices have increased and the demand for housing has increased across the board.

For example, estate agents in Hounslow have noticed house prices increasing in recent years, with an average price of over £500,000.

This means that buyers and sellers alike are keen to make or receive offers promptly, accept terms and navigate the somewhat lengthy and complex process of finalising the sale. 

One of the final steps and a point of no return for the sale is the exchange of contracts. Up until that point, buyer and seller can withdraw at any point and for any reason, but once each party has signed a contract and swapped them via their conveyances, the sale becomes legally binding.

At this point, the deposit is in place and there should not be anything standing in the way of the final completion of the sale. In the vast majority of cases, everything is fine, but there are some rare occasions where a sale can fall through after this point.

In most cases, this is due to a sudden and dramatic change in circumstances such as the property being significantly damaged or major defects being discovered that were not found during conveyancing, issues surrounding finance or a property chain, or the death of one of the parties.

What happens next will depend on whether there was a breach of contract on the part of the buyer or the seller. 

Typically, the process is that on the day when the sale is meant to be completed, the seller’s solicitor serves a notice to complete, and after ten working days can rescind the contract and keep the deposit if the buyer has breached the contract.

The buyer will be liable for conveyancing fees and other expenses that were incurred between the exchange of contracts and completion and could potentially face legal action.