I have made a commitment to buy a new property from a national developer. I have changed my mind and do not wish to complete. Will I be entitled to the repayment of my deposit?
Sometimes a prospective buyer will commit to buying a new plot from a developer, although the anticipated completion date of the plot can often be up to 12 to 18 months later. All developers now require prospective buyers to make a commitment to purchase at the earliest opportunity and, in most cases, within 28 days of paying a reservation fee on their plot.
While these deadlines are often extended to accommodate delays in the receipt of mortgage offers and other issues, the builder will proceed with the prospective buyer provided he is satisfied that the buyer is making genuine attempts to reach as early an exchange of contracts as is practicable.
The danger is that the projected completion dates for these new build properties can be up to 18 months in the future.
On exchange of contracts a contractual commitment is made on the part of both parties whereby the buyer is obliged to complete within 14 days of the developer notifying the buyer’s solicitors that the property is structurally complete. If the buyer wishes to withdraw following exchange of contracts, the buyer is strongly advised to contact the developer immediately.
The developer may sympathise with the buyers’ predicament and agree to cancel the contract and return the deposit. However, there is no obligation to do so and the risk is the developer will keep any deposit already paid.
Worse, the developer may hold you to the terms of the contract and insist you see it through. This would mean that you would have to complete when the building was structurally complete and then to immediately re-sell.
These are the dangers of committing to a purchase so far in advance. Personal circumstances can change.
* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email firstname.lastname@example.org