Strategies for Avoiding a Damaged Home Purchase: Post-Inspection Issues and Legal Considerations
Introduction: Why Agree to a Sale Despite an Uninspected Property?
Why would someone agree to a sale of a property that hasn't been inspected yet? It sounds like a challenging situation, but sometimes these circumstances arise. Despite this, it's important to carefully examine the advertisement and look for any potential lies. Estate agents are often quite savvy—saying something "needs modernization" can often cover many of the faults that might be discovered during a proper inspection.
Importance of a Property Survey
Property surveys are not compulsory, but they can save you a lot of money in the long run. These surveys are conducted by professionals who can identify existing issues in the property that you might not be aware of. For a small fee, a property survey can reveal problems that could cost significantly more to fix later on. Based on the report, you might decide to refuse the offer, make a lower offer, or negotiate that the seller addresses the issues first.
Country-Specific Laws
It's essential to note that laws regarding property purchases and deposits vary greatly by country. What's advised here might not apply to your specific situation. Always check the laws in your area before proceeding with a purchase.
United Kingdom: Breaking Down the Process
Exchange of Contracts and Deposits
In the United Kingdom, particularly in England, if you've exchanged contracts and paid a non-refundable deposit, you're typically binding the deal. The contract is legally binding, especially since "land" is considered a "unique item." If there's no "break clause" such as "subject to finance" or "subject to satisfactory survey," then you're likely to have a tough time backing out.
Conditional Break Clauses
Typically, the exchange of contracts includes a clause stating that the contract is "subject to finance." This means that if the mortgage company rejects the property due to an unsatisfactory survey, you can cancel the contract and get your deposit back. However, any costs you incur are not covered, so you might still be out a few thousand pounds.
Private Purchases and No Break Clauses
For private purchases without a solicitor or a break clause, the only option might be to back out, which means losing your deposit. The seller can potentially sue you to enforce the contract. For instance, if you exchanged contracts at ￡500,000 with a ￡50,000 deposit, and a serious defect is discovered, you have a choice: forfeit your deposit and hope the seller accepts your withdrawal, or the seller can sue you for financial loss.
Legal Protections and Recommendations
Always Include a Break Clause
It's crucial to include a break clause when exchanging contracts. This clause must cover scenarios like being made redundant, needing to sell your own property due to issues with prospective buyers, or unexpected tragedies. For example, a client of a solicitor had exchanged contracts on a property, and the seller was found dead the next morning. This created chaos, but luckily, the purchasers were willing to wait for the estate to be sorted out.
Postpone Sale Due to Unforeseen Circumstances
If you're made redundant, if something goes wrong with a prospective purchaser (e.g., death in a car crash), or if a seller is deceased, the original contract might need to be postponed or canceled. These circumstances can make the original finalization date legally unfeasible, especially until probate is granted.