It can be a vendor’s worst nightmare.
You’ve placed your home up for sale, made plans to go elsewhere and gone sale agreed.
In your head it’s just a case of dotting the I’s and crossing the T’s and your sale is complete but then your buyer pulls out, putting you back to square one.
Unfortunately that experience is not that uncommon.
On some occasions there is a genuine reason for the sale to fall through, which at least makes a disappointing situation, understandable. On other occasions, little if any reasons are offered to the vendor and this just makes a bad situation worse. Common reasons for purchasers pulling out of a property purchase are unsatisfactory structural reports, title issues and failure to obtain mortgage approval – as well as the dreaded “change of heart”.
‘Tyre kickers’ do exist, but an experienced chartered residential agent should be able to identify the best purchaser and provide you with the requisite advice in regard to your sale.
What rights do you have when you feel messed around though?
Sadly, you don’t get to keep the deposit as the system does allow purchasers to withdraw from a property purchase prior to signing a contract. One must remember that when buying or selling a property, both purchaser and vendor will always act in their own best interests.
It is often said that purchasing a house can be a stressful and arduous task but unfortunately so too is selling one and very often any offer you receive is subject to a formal exchange of contracts as well as a range of other matters including title, loan approval and a surveyor’s report.
In Ireland the law of contract recognises the payment of a deposit as non-binding and only a show of good faith. In practical terms, the payment of a deposit results in the property becoming “sale agreed” and withdrawn from the market while the conveyance of the property is completed.
It is generally held that the length of time taken to conclude the legalities of a sale has grown greatly in recent years. There are several reasons for this - higher work volume, three way closings etc - but sometimes the delay enables purchasers to continue their search and identify another property which they may favour over the one they’ve gone sale agreed on.
Under the Law of Contract, there is nothing that can bind a purchaser other than the signing of an unconditional contract. Therefore, should a purchaser withdraw from a property purchase prior to signing a contract, they are fully entitled to the return of the deposit in full, no matter how aggrieved the vendor may be.
There are however three scenarios where the deposit paid is not refundable. The first is where an agreed “non-refundable” deposit is paid as part of a private treaty sale. This would have to be agreed by all parties during the negotiations but is a rare occurrence.
The second and third scenarios where purchaser’s deposits are non-refundable is when a property is sold by other methods of sales such as public/private auction and sales by tender. In an auction, contracts of sales are prepared beforehand, and the bidders’ solicitors inspect these contracts prior to the auction. All other investigations (structural, finance etc) are also completed in advance of the auction. The highest bidder at the auction signs an unconditional contract and pays a 10 per cent deposit immediately after the auction. This sales method is highly efficient but is not as widely used as private treaty within the Irish residential market.
The final method is sale by tender. This method requires a purchaser to supply a signed contract and deposit along with their offer by a certain predetermined day and time. This method is mostly used for other property types such as commercial or industrial units.
The system is not perfect but if you’ve had an offer pulled don’t lose heart. There may be underbidders ready and willing to step in and with interest in property quite high right now, hopefully it isn’t too long before you’re celebrating your house being sold and dreaming about what comes next for you.
