Hi. I reserved a property at the peak of the 'property boom' in July 07. The property is due to be competed in April 2009.

It was agreed at £160k and a 10% deposit paid. In the current climate it is probably worth around £120k. and this could get worse!

From memory, the contracts detailed that the sale was not subject to receipt of mortgage etc.. However, it is inevitable that when the time comes the mortgage companies will not value the property at the higher levels, and we will have to hand over additional thousands of pounds to the developer as well as additional deposit to the lender!

I realise that if I pull out of the sale I will lose my deposit. But could I be 'sued' or otherwise legally FORCED to purchase the property?

Thanks for your assistance.

Hi --- Property contracts are not binding until the final exchange of contracts takes place, therefore you cannot be sued for breach of contract for not proceeding, and they cannot force you (how could they ?) to purchase the property.

You will as you expect lose your deposit though, which in itself is a high enough financial penalty if you withdraw, or at least some of it, but how much should be worded in the pre-contract you signed when you paid your deposit.

Proper Tea,

following on from CMK's excellent legal advice, just consider this; the developer will be fully aware of the situation with regard to falling property values, and it will not be in his/her best interests to pull out of your deal, even if he gets your original deposit, as he may still have a flat he can't shift in the current climate. So you need to be proactive here, and approach the developer and see how the land lies. Just a thought.

Many thanks for the replies.

Exchange of contracts HAS taken place. As I recall we paid an initial booking fee then had 4 weeks to sign contracts and pay the full 10% deposit. This all happened a year ago.

Where does this leave us legally?

And with regard to the other reply, is there room to try to 'renegotiate'?

Thanks again

And with regard to the other reply, is there room to try to 'renegotiate'?

hi,

I have a property abroad that is incomplete too. I assume you have held back a small amount (2%?) untill completion? this is standard form. So long as there is any outstanding payments then the contract is not valid. You have no obligation to purchase in full. although the market is changing rapidly, when you come to mortgage you are not trying to sell the property i assume? If not then you are simply obtaining a valuation. In this case you can value the property higher than the current market. i buy properties and I have just recently bought a flat in which I valued it at what I thiought it was worth. This was about £10000 over current market trends. This valuation was accepted. The problem of value in the current climate is that it usually takes presidence when selling. You are not I assume? So if you say it is worth £160,000 then stay with that. They can only bring the price down!! but only by so much. Over valuation by yourself is a simple tactic and can bring a positive result.

regards

ged

Hi,

Having read this, the advice from CMK and Skywalker is completely wrong.

I am a property lawyer and would advise as follows:

1. If you pull out you will lose your 10% deposit

2.You are also liable for damages to the developer, the main one being if they subsequently sell the property at a lower price. You must make up the difference.

I would contact your solicitor immediately rather than seeking legal advice here.

Please read the posts thoroughly before jumping to wrongful conclusions, this is where a lot of lawyers go wrong.... because they simply do not pay attention to the obvious fine detail.

1) I have already explained he will forfeit his deposit by withdrawing.

2) He will only be liable for damages that the developer suffers, but as the drop in property prices due to uncontrollable market conditions will cause a reduction in their expected profits, that loss will be hard.... to impossible, to illustrate and prove.

We also have told him to contact his Solicitor. ! .......But there's one thing for sure, he should not really be taking legal advice from a property lawyer who, has neglected to read this thread thoroughly. !