My neighbours' buyers failed to complete and the removal van had to be unpacked - does this happen often?

My neighbours agreed with their buyer to exchange and complete on the same day, and were packed up and ready to move but the buyers pulled out. Does this happen often?

Question: My neighbours are hoping to sell their house and buy another one. They agreed with their buyer to exchange contracts and complete on the same day that they were to exchange and complete on their new house. The removal van arrived, but my neighbours’ buyers failed to complete, so they could not buy the house they wanted. The removal van had to be unpacked. They are obviously distraught. Does this sort of thing happen often?
 
Answer:
Generally, in residential transactions, the buyer and seller will exchange contracts and will complete the transaction on a later date. Once contracts are exchanged, there is a binding agreement between the buyer and the seller, from which neither party can withdraw without penalty. Therefore, if a party fails to complete, then that party is in breach of contract. The time between exchange of contracts and completion varies, depending on the circumstances of each party. It could be a few days, months or even years.
 
A simultaneous exchange of contracts and completion is perfectly acceptable and is often used if there is no chain of buyers involved. This is because, as your neighbours have found, although the buyers may say they are going to exchange contracts and complete simultaneously, there is no binding agreement and they could decide not to proceed on the day fixed for exchange and completion. A simultaneous exchange and completion gives no security to either party and so is a risky way to proceed when people are actually moving home on the completion date.
 


What's your problem?
If you have a question for Fiona McNulty, please email legalsolutions@standard.co.uk or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE. We regret that questions cannot be answered individually but we will try to feature them here. Fiona is legal director in the real estate group of Foot Anstey LLP in Exeter (fionamcnulty@footanstey.com)
 
These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.


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