The exchange of contracts is a significant milestone in the process of selling a house. It typically marks the point when both the buyer and seller have agreed on the terms of the sale, and the transaction is legally binding. However, there are several factors that can still potentially derail a sale after the exchange of contracts. In this article, we`ll explore some of the most common reasons why a house sale may fall through at the last moment.
1. Issues with the buyer`s financing
Even after the exchange of contracts, a buyer`s financing can still fall through, leaving them unable to complete the purchase. This can happen if the buyer`s lender has a change of heart or discovers something on the buyer`s credit report that makes them ineligible for the loan. It can also happen if the buyer loses their job or experiences another significant change in their financial circumstances between the exchange of contracts and completion.
2. Problems with the property
If a problem with the property comes to light after the exchange of contracts, it can prevent the sale from going through. For example, if a survey reveals serious structural issues or subsidence, the buyer may decide they no longer want to proceed with the purchase. Similarly, if the property is found to have been built without the proper planning permission or building regulations, the buyer may be unable to secure a mortgage and may back out of the sale.
3. Legal issues
There are several legal issues that can stop a house sale after the exchange of contracts. For example, if a third party has an interest in the property, such as a leasehold or a right of way, it can cause problems. Similarly, if there is a dispute between the seller and a neighbor over a boundary or other issue, it can delay or even prevent the sale.
Although it is less common these days, gazumping can still occur after the exchange of contracts. Gazumping happens when a seller accepts a higher offer from a different buyer, even though they have already agreed to sell the property to someone else. Although it is legal, it can be frustrating and disappointing for the original buyer, who may have spent time and money on surveys and searches.
5. Chain breaks
If the buyer or seller is relying on a chain of other transactions to complete their sale, it can make the process more complicated and increase the risk of a collapse. A chain break can occur if someone in the chain backs out at the last minute, leaving everyone else in limbo. It can also happen if someone further up the chain has a problem with their sale, causing a knock-on effect.
In conclusion, there are several reasons why a house sale can fall through after the exchange of contracts. As a seller, it is essential to be aware of these potential issues and take steps to mitigate them before the exchange takes place. Similarly, as a buyer, it is vital to do your due diligence before committing to the sale, so you can be confident that the transaction will go smoothly. By being prepared and proactive, you can minimize the risk of a collapse and ensure a successful sale.