Sellers Need to Be Able to Exit Linked Sales
Category News
Most property buyers today 1st need to sell their own homes before they can proceed with the purchase transaction, and most sale agreements make provision for this with a “subject to” clause.
But what happens when something goes wrong and the buyer’s own sale falls through? “This can and does happen,” says Berry Everitt, CEO of the Chas Everitt International property group , “due to the withdrawal of the second buyer’s mortgage finance, perhaps, or due to insolvency and sometimes even due to ill-health or death, and the first seller in the chain needs to be protected in such circumstances.”
The “subject to” clause usually stipulates a date by which the buyer must sell his own property, and also usually provides for simultaneous transfer, since the buyer needs the proceeds of his own sale to fund the purchase of his new home.
However, he says, it is very important for the first seller that the clause it also contains a specific transfer cut-off date – and a provision that the whole deal will fall away if something goes wrong with the buyer’s sale and he cannot or will not take transfer by that date.
Writing in the Property Signposts newsletter, Everitt says that if the clause is not worded in this way, the seller might well find himself put “on hold” for many months and even years while the buyer sorts out the problems with his transaction.
“And this is just one of several reasons for homeowners to check the sale agreement that their agent will be using, before awarding a mandate.
“They should be aware that there is no such thing as a ‘standard’ sale agreement in the real estate industry and if necessary should get this specific contract checked and explained by their own attorney to ensure that their interests will be properly represented and protected.”
Author: Barry Davies