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In December 2018 I put down a Reservation Fee £5,000 on my my first UK property for a cash purchase of £300,000 for a new build flat with an existing tenant for Buy to Let. The Reservation Form states that “100% balance payment due at closing on or before 15th Feb 2019”. I have not paid any extra money nor gone through the 'Exchange of Contracts'. My solicitors informed yesterday me that the conveyancing work is still not ready for ‘Exchange’ or ‘Completion’ yet.
I am considering to pull out if this deal for better investment opportunities. Seems there is a breach of contract here, and I would like to know whether I can pull out of this agreement and get a refund on my £5,000 reservation fee if I do so after the 15th Feb ?
Hi Ally,Your solicitor is much better placed to answer this question as they have your contract.As a general rule, you can pull out of a property transaction right up until exchange. If you do, it is likely you will lose your £5K deposit though.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Many thanks Vanessa. Actually, I purchased the property through an agent in Hong Kong who provided free UK legal fees. Not very impressed with their assigned solicitor and suspect they may be acting in the best interests of the vendor / HK agent.
It seems you were contracted to pay by a certain timeframe, regardless if the property was complete or not. Have you been able to check if the development is finished?I don't see how that clause could be enforceable tbh, especially as you have not exchanged.You will probably lose your deposit, depending on what your contract stipulates would happen in the event of you pulling out.Also ... How can a property that has not been completed yet have a tenant?
Hi Vanessa, thx for your advice. The flat was completed in 2017 but the 'completion' I was referring to is for completion of purchase.
Thanks for clarification. You can pull out, but you will probably lose the deposit. BTW - it is very rare to put down a deposit unless you are buying a new build from a developer and then they will ask you for a reservation fee. I am not sure why you put down a deposit and who advised that?No money is paid over until exchange. On exchange, you pay 5 or 10% - whatever you have agreed with the vendor and the balance is paid over at completion.
Thx Vanessa, all the agents in Hong Kong ask for reservation fee for all types, off plan, new or old builds. Really disappointed with the solicitor, said he'd call me today but never bothered. Will have to consider very hard over the weekend to pull out or not.