Property is a scarce and expensive commodity. When there are many buyers after the same property, a seller can enter a contract race by accepting more than one offer. This is to filter out the best buyer.
Contract Race – how it works
A Contract Race occurs when a seller accepts more than one purchase offer. The vendor’s solicitor issues contract packs to all the potential buyer’s solicitors. The person who can exchange first ‘wins the race’ for the property.
Timescales
The time it takes to complete a property transaction can vary. A cash buyer is usually faster in the race over a buyer waiting on mortgage approval.
When contracts are exchanged, both parties are legally bound to each other. If either side change their mind at this point – there are expensive penalties.
Duty to Inform
The seller’s solicitor has a duty to tell the buyers when a Contract Race is taking place. However, before the vendor’s solicitor can do this, they must get permission from their client.
Consequences
There is no legally binding contract at this stage, so buyers have the right to change their mind and withdraw from the purchase when they are told about the Contract Race.
A vendor cannot take action against a purchaser withdrawing. This means the acquired costs must be covered themselves.
This can leave the seller back at ‘square one’ – looking for new buyers.
It is always advisable to speak to your solicitor before entering into a ‘contract race’ so that you are aware of the consequences and implications.
The purchasers need to think about costs they may lose if they are unsuccessful in the contract race. For example, surveyor fees, searches and legal costs.
Get in Touch
At Levi Solicitors, our residential property team are accredited by the Conveyancing Quality Scheme. We explain the conveyancing process throughout the various stages and ensure that we complete your purchase or sale in accordance with your timescales. Call us today on 0800 988 7756 for a no obligation quote. Alternatively, email your enquiry to info@levisolicitors.co.uk.
