Good grief! No, I hadn’t. The police response is absolutely inept, but it is amazing to me that the transfer could have proceeded that easily. That solicitor could face being barred from handling real property transactions here.
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Seen this happen before. About 15 years ago a guy in Portsmouth rented out his house while he went abroad to teach English.
Yep…imagine thinking that there hasn’t been a fraud here? Hahaha. Idiots.
I do have some sympathy for the solicitors here. We are obliged to obtain a fair amount of information in the Know Your Client obligations and property transactions are the most scrutinised here as a traditional focus of money-laundering.
If someone has stolen someone else’s identity to the extent that has been reported here then it becomes very difficult for Solicitors to pick this up. They had legitimate utility bills, legitimate photo driving licences, bank statements in the name of the owner and with the correct address etc. During the pandemic in particular more and more transactions were remote. We have just started using an app requiring clients to take selfies as part of the identification process and that’s currently much harder to ‘con’ but it won’t be for long. Technology simply cannot keep up.
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Yes, I doubt it would be automatic here too, but the bar association would definitely be looking at it fairly closely. The chaotic manner in which property transactions take place in the UK must be a factor as well.
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I agree the property transfer process in the UK needs a complete overhaul.
That includes the processes of Real Estate Agents, Surveyors and Solicitors.
If you agree to sell a property to someone and that person agrees to buy it, and both parties have signed to endorse that, then unless there is a major unresolvable problem, the contract should be fulfilled.
The ability to pull out of the deal at the last minute leaves everyone open to being held to ransom. There should be significant penalties for anyone that pulls out of the contract without sufficient reason.
There are. Considerable damages are payable under the Standard Conditions of Sale if a party breaches a Sale Agreement.
So a party cannot withdraw or renegotiate a contract once it has been signed? I recently sold a property and right at the final moment, the buyer insisted that we reduce the price (due to a survey issue conducted nearly 6 months previously) or he was going to withdraw from purchasing. The Real Estate agent told me he had every right to do so.
He waited until everything was completed and then dropped that bomb. Our solicitor also advised he was able to do that.
So we either tell him to do one - and start the whole process over again and search for a new buyer or we negotiate and reduce our price - it was a shit situation and we came away feeling like we had been played by all parties.
If you’ve exchanged contracts you’re committed. Withdrawing will incur damages of 10% of the sale price plus interest.
However, if a survey hadn’t yet been done it sounds like all you had done was agree a sale subject to contract. That is exactly what it says on the tin.
You may even have signed your part of the Sale Agreement, but until you’ve exchanged there is no agreement. If a party breaches an agreement after contracts have been exchanged, the innocent party is entitled to damages.
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Yes - I understand that.
All these shenanigans occurred prior to the exchange of contracts.
The survey had been completed nearly 6 months before.
It was this:-
Gazundering is when a vendor accepts an offer from a buyer and can therefore proceed with their own property purchase. In many cases, the seller no longer accepts viewings from other potential buyers.
However, in the same way sellers can gazump buyers close to exchange, buyers can gazunder their vendor by reducing their offer close to exchange. The seller is then stuck, especially if they are relying on the sale money to fund their new purchase.
What I am saying is when there is an offer and acceptance, you should be legally bound to proceed unless there is a substantial reason not to. (Finance, Structural etc)
This would stop people messing others around and playing games - we were six months into the sale procedure with the buyer when he dropped his bomb - to start again would have meant even more of our time and money.
I think Scotland has different rules to the rest of the UK and already does this…but perhaps someone else can confirm?
To form a legally binding contract you need a minimum of offer, acceptance, consideration, and the intention to create legal relations. You also need to consider capacity.
Some agreements, however, have to be in writing. Transfering an interest in land is one of them. Deeds and Guarantees are a couple of others.
For property transactions contracts must not only be agreed but also exchanged, so that each party hold the signed agreement of the other and together they act as counterparts. At that point, the terms are binding but not before.
I would not enter into such prolonged pre-contract discussions as @BigJon did. Particularly if there are related transactions. Set a time limit for the parties to exchange contracts and if that’s not met, break off discussions, put the property back on the market (if it was taken off) etc. There’s also nothing to stop sellers from entering into contract races with more than one potential buyer, providing these are disclosed.
In terms of improving the current legalities in the UK, I don’t see how reducing this formality so that properties can effectively be exchanged on the basis of an oral agreement would assist countering fraud. It would have the opposite effect.
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I am not suggesting it is legally binding on an oral agreement. I am suggesting that if someone makes a firm offer, in writing, to purchase a property and then that offer is accepted, then that in itself becomes a legal contract to buy and sell, binding on both parties. A deposit - held by a third party, at this point would be paid. Once this is in place the property is off the market and no other offers can be entertained whilst the existing offer is in force.
This contract could be “subject to” finances, and inspections. A time limit of say 30 days could be set for finances to be proven and surveys/inspections undertaken. Once the 30 days have elapsed and finances have been proven and agreed and inspections have been finalised, then the contract is unconditional and proceeds to exchange, say within 60 days or a mutually agreeable timescale. Should there be any issues say with the survey, the vendor can choose to fix them, or offer a reduction in price to compensate for any structural problems.
After the 30 days elapse there should be penalties for anyone seeking to withdraw from the contract. Loss of deposit for instance. It would certainly stop a lot of the gazumping, gazundering, broken chains and general shithousery etc that currently occur in the property market.
The problem however, is that you’re assuming that the process always takes a definite amount of time that is knowable before the offer gets accepted, and is consistent throughout all sales. What happens under your conditions if the backlog at the council piles up and the buyer’s solicitors can’t complete the search on time?
What you’re talking about is an exclusivity agreement, which already exists as an option. It cannot bind the parties to actually transfer the title in land for very good reason. Even under your scenario, such a ‘binding’ agreement would remain subject to things like satisfactory survey, proof of funds/mortgage offer, timings, related transactions etc.
Yes exactly. - All of which can be satisfied in an initial 30 day offer and acceptance agreement. Everyone knows exactly where they stand and nobody can mess anyone else around. After this period the O and A becomes unconditional and proceeds to exchange.
Basically, I am suggesting this - " I will buy your house at this agreed price unless I can’t get finance to purchase, or your house has a structural problem. I understand I cannot back out or renegotiate the price unless there are significant structural issues or I cannot get finance. If I do I loose my deposit"
We all know this stuff but worth an update
So in other words it stays exactly as it is. The ability to enter into a pre-contract exclusivity agreement already exists albeit you are extremely unlikely to get anyone to pay an exclusivity fee equivalent to 10% of the value of the property.
In much of Canada (Quebec is somewhat different), an accepted offer to purchase is binding on both parties, subject to a limited set of termination conditions. The offer itself is standardized, with a limited number of parameters that can be specified. Deposits are not normally 10%, but significant enough to be a meaningful loss.
Canadians trying to operate in the dysfunctional UK real estate market compare it to the Hunger Games, one of them seems to have taken it personally. There is also empirical evidence that it is quite an inefficient market - something like £400M in lost transaction costs per year.
The Canadian housing market is tough, simply because the rate of increase has been astonishing - in the past few years, offers to purchase with any conditions at all have been routinely discarded, where inspection and finance were two very common conditions in the past.
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Johnson felt it was necessary is answer claims of corruption at the COP 26 conference.
What % of properties sold in the UK are done so under such an agreement? I have not heard of it before you mentioned it and it has never been suggested to me during conveyancing.