The plan's gone off

Our lawyer Fiona McNulty looks at the legal issues of breaching a contract to purchase property off-plan
Buying off-plan cartoon
© Malcolm Willett (
Question: I bought an apartment off-plan with a 10 per cent discount about 18 months ago and exchanged contracts on it. I paid a deposit plus a reservation fee direct to the developers.

I need to complete the purchase in two weeks’ time but because the apartment has been valued at less than the purchase price, the only mortgage I can get has a very high rate of interest and is for a much lower amount than I need.

So I have decided that I do not want to buy the apartment. I know I will lose my deposit. What else happens?

Answer: When your solicitor is told that the apartment is ready you must pay the balance due to complete the purchase. If you fail to complete you will be in breach of contract and your seller will be entitled to rescind the contract, keeping your deposit and your reservation fee. Additionally, the seller can resell the property and retain any excess above the price you agreed to pay.

However, if the seller sells the apartment for less than the original contract price, he is entitled to claim damages for the reduction. When calculating the damages, you must be given credit for money paid and for the discount as it is an incentive.

You should ask your solicitor to negotiate you out of the situation and reach an agreement with the seller’s solicitors as soon as possible. If you paid only a reduced deposit on exchange, you will also have to pay a sum to make up the full 10 per cent.

What's your problem?

If you have a question for Fiona McNulty, email We regret that questions cannot be answered individually.

Fiona is a partner in the property team at Thring Townsend Lee & Pembertons Solicitors

Follow us on Twitter @HomesProperty and Facebook