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Can a buyer and seller do a deal to stop gazundering and cover costs?

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I have heard about people being ‘gazumped’ and losing out on a property after their seller backs out due to a higher offer from elsewhere. 

Can a buyer and seller enter into an agreement before the sale of a property to compensate for the costs if the other side withdraws? JS

Can a seller and buyer enter into an agreement before a property sale to compensate for costs if the other side backs out? (Scroll down for a template agreement)

Can a seller and buyer enter into an agreement before a property sale to compensate for costs if the other side backs out? (Scroll down for a template agreement)

MailOnline Property expert Myra Butterworth replies: Competition for properties has been fierce this year.

It follows measures to boost the housing market during the pandemic, including a stamp duty holiday (that ended at the beginning of this month).

But the buying boom brought out an ugly side of the market, and that is a practice known as ‘gazumping’. This sees the seller back out of an agreed sale due to a higher offer from elsewhere, and either take it or ask for more money from the original buyers.

Gazumping was the leading cause of property deals not going ahead in the past 12 months, according to research from comparison site Comparethemarket.com.

In Scotland, gazumping is much rarer because an agreement becomes binding the moment a written offer is accepted. However, the practice remains legal in England and Wales. 

But there is an agreement that both parties can sign to help mitigate the risks of it happening – or at least be able to recoup your costs if it does.

Stephen Gold, a retired judge and author, explains: Yes, a vendor and buyer can enter into an agreement before the sale of a property to compensate for the costs if the other withdraws the offer.

Unless a property has been sold at auction or two undesirables have done a deal in a saloon bar (cash handed over and specifics of deal written down and signed on a beer mat) the agreement to sell and buy will have been made ‘subject to contract’.

It means that at some later stage, a formal document will be drawn up in duplicate setting out the detail of the transaction, including the date for completion. Each side will have signed their copy and the two copies will be swapped round.

That is what ‘exchange of contracts’ is all about. Once that happens both sides are legally committed. 

And until then the usual position is that either side can drop out without having to pay one new pence of compensation to the other or offering a single lie as an excuse for their action. 

There is more sharp practice in home deals than in an open prison of white collar fraudsters. 

Sellers may be secretly negotiating with a host of other would-be buyers and buyers may be secretly negotiating with a host of other would-be sellers.

Of course, there is likely to be a problem for both sides in legally committing themselves at the outset. 

The sale will probably be dependent on the purchase of another property with the two transactions needing to be dovetailed. 

As for the buyer, they may well need to dovetail with their own sale and, anyway, the chances are that they will have to fix up a mortgage offer. 

There is also the matter of a survey on the property or some inspection report from a surveyor through the mortgage lender or privately (or both) just to ensure that the property is not sinking by the day or have someone to sue if the surveyor was blindfolded. 

Checks too will be vital to ensure that a public lavatory or fish and chip shop is not due to open soon next door.

It is inevitable that both sides will incur expense before ‘exchange of contracts’ – and, no, I hadn’t forgotten the charges of the conveyancing solicitor or licensed conveyancer. 

The way to discourage ‘gazumping’ (putting up the price) or ‘gazundering’ (putting down the offer) and for each side to protect against the other’s lies or bad faith which leads to them suffering financial loss is to have a lock out agreement: a little binding agreement ahead, hopefully, of a big binding agreement.

For a specific period – perhaps six weeks but it could be longer or shorter – the seller agrees not to market the property or negotiate with anyone else and to get on with the paperwork. 

The buyer, for their part, agrees to use their best endeavours to obtain their mortgage and instruct their conveyancer. If either side withdraws before time is up or fails to ‘exchange contracts’ in time, they have to compensate the other for the money they have spent out. 

Those are the bare bones of it. I penned an agreement along these lines in my book (scroll down to see that agreement).

The paragraphs of the template may be mixed and matched. It can even be varied to cover each side paying over a deposit, which could be any percentage of the purchase price.

The payment by each side would be held by a third party. Should either side drop out or break the agreement, the other would be entitled to take the entire amount held by the third party.

There is more than a teeny-weeny prospect that faced with the suggestion of a lock-out agreement, the seller will say ‘on your bike’ and the seller’s estate agent will say ‘you’ve got to be joking’.

Or that ‘this property is highly desirable and I have someone on the phone right now willing to pay five grand more than you and exchange contracts yesterday’.

It’s worth a try, if only to see how enraged the seller becomes and how much blood drains from their face at the suggestion. You can then draw your own inference about whether they can be trusted.

But there is an alternative to the lock-out agreement that is more likely to be appropriate where, for example, the seller must move, has yet to find another property but wants to know he has a good chance of a sale being close to being in the bag. Or where the buyer has sorted out everything except finance but is confident all will be well. This is an agreement for an ‘option to purchase’. 

The buyer agrees to hand over a sum of money for the right to buy the property within a specified period and at a specified price. If they do not buy in time, they lose that money. If they do buy in time, the money paid is credited against the purchase price. 

The agreement would need to be registered at the Land Registry or Land Charges Registry.

TEMPLATE LEGAL AGREEMENT

*THIS AGREEMENT is made on 14 July 2021 BETWEEN ARNOLD TRUSTWORTHY of 20 St Mary’s Courtyard Twickenham Middlesex KT42 1LA (‘the house’) (‘the seller’) and CLIVE TROUBLESORE of 149 Magnolia Crescent Twickenham Middlesex KT40 1LA (‘the buyer’)

BACKGROUND

(1) The seller owns the house.

(2) The parties have agreed ‘subject to contract’ that the seller will sell and the buyer will buy the house at the price of £600,000.00 (‘the price’).

(3) The buyer has paid a holding deposit as a demonstration of his good faith to Grabapound (Homes for the Discerning) (Estate Agency) Ltd of £250.00 as stakeholder.

(4) The buyer requires a mortgage advance on the security of the house of £425,000.00 and intends to make application for such an advance, to arrange for the house to be surveyed as part of the appli­cation and to instruct a solicitor or licensed conveyancer to act on his behalf in connection with his intended purchase.

IT IS HEREBY AGREED THAT in consideration of the above mat­ters and the parties entering into the obligations provided for by this agreement and specified below:

(1) If and so long as the buyer complies with his obligations under this agreement the seller and no person or company acting on behalf of the seller will until the expiration of 42 days from the date of this agreement –

(1.1) seek another buyer for the house;

(1.2) advertise the house as available for sale;

(1.3) negotiate or agree with any person other than the buyer for the sale or the terms of the sale of the house whether on a ‘subject to con­tract’ or otherwise basis; or

(1.4) issue a draft contract or other documentation relating to the proposed sale of the house to anyone other than the buyer.

(2) If and so long as the buyer complies with his obligations under this agreement the seller will –

(2.1) cause his solicitors to deliver to the solicitor or licensed convey­ancer for the buyer a draft contract and other usual documentation for the proposed sale of the house to the buyer within 7 days of the date of this agreement and reply to all reasonable enquiries about the house raised by them with reasonable promptness; and

(2.2) until the expiration of 42 days from the date of this agreement, provide facilities to the surveyor or valuer for the buyer’s prospective lender and for any surveyor or valuer directly instructed by the buyer to inspect the house subject to reasonable notice of their proposed visit.

(3) The buyer will use his reasonable endeavours to –

(3.1) procure an offer of a mortgage advance on the security of the house for no more than £425,000.00 as soon as possible;

(3.2) instruct a solicitor or licensed conveyancer to act for him on the proposed purchase of the house and to approve the draft contract with reasonable promptness; and

(3.3) be ready, willing and able to exchange contracts with the seller as soon as possible and in any event no later than the expiration of 42 days from the date of this agreement.

(4) The buyer will answer in an expeditious manner and in any event within two working days of their receipt such questions as shall be put to him by or on behalf of the seller as to his compliance with his obligations under this agreement and, in particular, as to the identity of the solicitor or licensed conveyance instructed by him to act on his proposed purchase of the house and the progress of his application for a mortgage advance.

(5) If before the expiration of 42 days from the date of this agree­ment the buyer decides to withdraw from his proposed purchase of the house from the seller, he shall forthwith give written notice of such withdrawal to the seller and shall pay to the seller the seller’s reason­able conveyancing costs and disbursements relating to the proposed sale to the buyer [not to exceed the sum of £x] but shall otherwise be under no further liability to the seller under this agreement or other­wise.

(6) If at the expiration of 42 days from the date of this agreement the buyer is not ready, willing and able to exchange contracts with the seller, he shall make the same payments to the seller as provided for by paragraph 5 of this agreement but neither party shall be under any further liability to the other party under this agreement.

(7) If before the expiration of 42 days from the date of this agree­ment the seller decides to withdraw from his proposed sale of the house to the buyer, he shall forthwith give written notice of such withdrawal to the buyer and shall pay to the buyer the seller’s reasonable convey­ancing costs and disbursements relating to the proposed sale to the buyer [not to exceed the sum of £x] and the mortgage application sur­vey or valuation fee and any privately instructed survey or valuation fee incurred by the buyer [not to exceed in the aggregate the sum of £y] but shall otherwise be under no further liability to the buyer under this agreement or otherwise.

(8) If before the expiration of 42 days from the date of this agree­ment the buyer shall give the seller written notice to the seller that he is ready, willing and able to exchange contracts with him at the price and with completion to take place no later than [insert date] and the seller does not exchange contracts within 28 days of the receipt of such notice, the seller shall make the same payments to the buyer as provid­ed for by paragraph 7 of this agreement but shall otherwise be under no further liability to the buyer under this agreement.

(9) For the avoidance of any doubt, this agreement does not commit the seller to the sale or the buyer to the purchase and does not form part of any other contract.

SIGNED Arnold Trustworthy Clive Troublesore

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Happy in Hexham: We visit the Northumberland town voted the jolliest place to live

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Driving into Hexham, I cross a sturdy stone bridge spanning the Tyne. The satnav is set for the Market Place, but forget about parking there or in the short-stay.

In fact, I’m forced back down the hill to the huge car park by Waitrose. Not many spaces here either. Maybe everyone is flocking to Hexham after the property website Rightmove announced this week that it’s the Happiest Town in Britain.

Or maybe, it’s just a normal weekday: Northumberland is a huge county and this is the only realistic place to do your shopping if you live between Newcastle and Carlisle.

Convivial: Hexham¿s Market Place. The market town was a frontline settlement in the medieval skirmishes and wars between Scotland and England

Convivial: Hexham’s Market Place. The market town was a frontline settlement in the medieval skirmishes and wars between Scotland and England

Fortunately, it’s only a short walk uphill on Hallgate from the car park to the Market Place, enough to establish the demographics of this northern market town. 

Hallgate is a winding row of fine Georgian houses — there’s a memorial mason, chic hairdresser’s, three cafes, four art galleries. And Waitrose.

The huge, impregnable cube of the old gaol in the centre of town is a reminder of a more turbulent history.

This was a frontline settlement in the medieval skirmishes and wars between Scotland and England. 

That noble, heroic William ‘Braveheart’ Wallace terrorised Northumbria in 1297 — something Mel Gibson managed to leave out of his movie — though the monks of Hexham Abbey struck a deal to save the town.

If today’s residents are ecstatic at their Rightmove award, they are hiding it well. The newsagent hasn’t read the newspapers describing Hexham’s triumph.

But at the Grateful Bread artisan baker in Market Street, I’m told: ‘Aye, they’re happy enough around here.’

An informative welcome: Hexham boasts chic shops, a bustling High Street and the ancient kingdom of Northumbria on its doorstep - as well as rows of fine Georgian houses

An informative welcome: Hexham boasts chic shops, a bustling High Street and the ancient kingdom of Northumbria on its doorstep – as well as rows of fine Georgian houses

I buy one of the shop’s fine sourdough loaves, noting that the £4 price tag wouldn’t be out of place in the second happiest town on Rightmove’s list, swanky Richmond in South-West London.

The story that made the biggest difference to the town isn’t the two Rightmove wins (they also won the Happy gong in 2019), but Country Life’s description of Hexham as ‘the best market town in Britain’. That was in 2005.

Some residents describe the property market here as BCL and ACL — Before and After Country Life. 

And the houses on offer are a far cry from the ‘small, spare, dour’ cottage the writer Joan Aiken encountered when she first came here in the 1930s. But like many southerners, she stayed.

I do find some people who aren’t overly happy: estate agents. That might seem odd. After all, a major property website has just given their town a big shot in the arm. 

At Pattinson estate agents, situated on the wonderfully named Priestpopple, manager and senior valuer Marc Hydelman tells me prices ‘have shot up. And as an estate agent I ought to be pleased — we’re up 60 per cent on last year. Crazy.’ He is also happy he moved here from Rickmansworth, in Hertfordshire, 29 years ago.

So why the unhappiness? ‘Supply can’t keep up with demand,’ says Mr Hydelman. As a result, you will struggle to find any properties for sale in Hexham town centre.

‘Lack of supply is hitting both rentals and sales,’ agrees Ed Seymour of Foster Maddison. ‘Some vendors are being aspirational with prices, but good stock is selling fast — often over the asking price. We have had more best and final offers at closing dates than we have ever had — it sounds great, but the volume of sales is still down hugely’.

 Hexham is handsome and agreeable. That said, I can name half a dozen English market towns I’ve visited in the past three years alone that can rival it

Hexham is handsome and agreeable. That said, I can name half a dozen English market towns I’ve visited in the past three years alone that can rival it: Malvern, Tetbury, Shaftesbury, Uppingham, Diss, Market Harborough.

What you don’t get in those towns is an average price of under £300,000 for a house. And you also don’t get the ancient kingdom of Northumbria on your doorstep. 

As the winter light fades, I drive north to a section of Hadrian’s Wall at Carrawburgh. Here, sunken in a farmer’s field, are the remains of a temple dedicated to the Roman god Mithras.

It’s not the most impressive Roman ruin. But then I gaze north and south and see England’s most magnificent county stretching as far as the eye can see. There’s not a soul in sight. And that makes a lot of people happy. 

On the market… Cheery homes 

Bellingham: There are two bedrooms in this cottage in Bellingham, which is 16 miles north of Hexham and close to the Northumberland National Park. Pattinson, 01434 605 376. £165,000

Hexham: This four-bedroom house is on Laurel Road on the outskirts of the town. There is a single garage and the property is surrounded by woodland. Red Hot Property, 01434 601 800. £375, 000  

Fourstones: The Gables has five bedrooms, sweeping country views and is a ten-minute drive from Hexham. The home is in the village of Fourstones. Finest Properties, 01434 622 234. £565,000

 

 

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Everybody over 16 to get booster shots following Niac recommendations

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Everybody over the age of 16 in the State will now be offered booster shots following a decision by the Department of Health based on advice from the National Immunisation Advisory Committee (Niac).

The booster shot will be offered in order of preference to pregnant women first, then those aged 40 to 49 and finally those aged between 16 and 39 in descending order starting with the oldest first.

They will receive their extra jab in these cohorts at least five months after their last vaccine, but, in the case of those who have been given the one shot Janssen vaccine, the gap will be at least three months.

Those who have had Covid-19 after being fully vaccinated before will have to wait at least six months following infection to receive their dose.

It now means that everybody over the age of 16 will be offered a booster as Niac has already approved the shots for everybody who is 50 or over.

Booster shots were first recommended for those over 80 or those over the age of 65 in nursing homes in September. Last month the programme was extended to 60 to 79 year olds and on November 15th to those between 50 and 59.

This advice received by Niac reflects the recommendations made in respect of booster doses in the latest European Centre of Disease Control (ECDC) rapid risk assessment which recommends that countries should consider a booster dose for all adults with priority being given to people aged 40 years of age and above.

The Minister for Health Stephen Donnelly said it will be some time before the new cohorts get their vaccine as they have not reached the recommended gap since the second dose.

“We continue to prioritise boosters because we know that they are having a positive impact on the level of hospitalisation, severe illness and mortality from Covid-19 in those aged over 70,” Mr Donnelly said.

The HSE has started offering walk-in clinics for Covid-19 booster vaccines to people in their 60s and to healthcare workers at designated times through its vaccination centres.

In a speed-up of the booster programme, the walk-in clinics will be available to eligible groups once it has been at least five months since their second dose of a Pfizer, Moderna or AstraZeneca jab in their initial vaccinations, or three months since the individual received the single Janssen vaccine.

The booster rollout will also be accelerated for those who are in their 60s.

Damien McCallion, the HSE’s national lead for vaccinations and testing, said that many of the 470,000 people in their 60s will only become eligible for boosters over the coming weeks.

The walk-in clinics will allow the HSE to administer booster doses more quickly. Details of the times and locations of the walk-in vaccinations are available on the HSE’s website.

“We are very conscious that life has moved on for many people and it isn’t always possible for people to come forward on an appointment basis,” he told the weekly HSE briefing.

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How can I ensure my listed home’s kitchen extension has right approvals? 

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I’m buying a listed property and want to make sure a recent kitchen extension was done with the right approvals. 

How do I check this and protect myself on this front? LP

Before buying a period property, check for the correct consents if any renovation work was carried out

Before buying a period property, check for the correct consents if any renovation work was carried out

MailOnline Property expert Myra Butterworth replies: Before buying a period property with a recent kitchen extension, you will need to check that the relevant consents were sought.

This is because you will inherit the liability for any unauthorised work undertaken by the vendor.

Ultimately, this risk can be removed completely by reversing the works carried out – if that is possible – or by applying retrospectively for consent for the kitchen extension.

There are compromises that can be made, including looking at an indemnity insurance that will cover you and bank against the cost of rectifying unauthorised alterations.

And if you are a cash buyer, then you can decide to proceed on the basis that you will accept the risk for the lack of consent.

Vanessa Rhodes, of law firm Kingsley Napley, said: If you’re looking to buy a house that is listed, it is likely to be a unique and interesting property full of character. You are right that being listed means there are additional controls over any works to the property.

The National Heritage List for England protects buildings of special architectural or historical interest, which are considered to be of national importance. It means listed building consent is required for all works of demolition, alteration or extension to a listed building.

Local planning authorities provide approval for works to listed buildings. Where the works have an impact on the external appearance of the building, planning permission may also be required and should be applied for at the same time. 

For example, this may include building an extension or installing new windows and doors. 

Below, Vanessa covers what you need to know: 

How do I check necessary consents were obtained?

Make sure that you instruct a specialist heritage surveyor to review the property and all the planning and listed building consents for the property to verify the corrects consents were obtained.

This can be in addition to having a regular building survey carried out or some surveyors will do both in one survey. 

The heritage survey should make clear whether the kitchen extension was approved, and what to do if it isn’t. 

You can get heritage surveyors that will do both in one survey and charge the same as a standard building survey but frequently, clients will instruct one in addition to the building surveyor and they are usually slightly cheaper.

Heritage surveys also provide historic building and heritage conservation advice to assist buyers who will be responsible for the practical care of historic buildings.

Your solicitor will review the results of the local authority search for the property, which reveals all the permissions obtained from the local planning authority for the property. 

They will also raise enquiries with the seller to find out if the right consents have been obtained and check that any conditions on the listed building consents have been discharged or, if there are on-going conditions that they are being complied with.

Your solicitor and heritage surveyor will also check to see if the work was done before the building was listed. If this is the case, there will be no issue as no listed building consent will have been needed.

Why is checking important?

It is essential to check if the previous owners obtained the relevant consents because you will inherit the liability for any unauthorised work they undertook.

Given there is no time limit on enforcement action, you may be required to reverse the alteration at any time in the future. In effect, therefore you may potentially have to ‘undo’ or alter the kitchen extension if it lacked approval. 

This could be costly and may reduce the value and your enjoyment of the property, so should be carefully considered before proceeding with the purchase.

It is also a criminal offence not to seek listed building consent when it is required. 

The maximum penalty is two years’ imprisonment or an unlimited fine. Not knowing a building is listed, or claiming the works were carried out by a previous owner are not defences to any criminal proceedings.

Your options as a buyer

As the buyer, you need to consider the extent of any liability you might take on before proceeding with the purchase. 

If you find that works have been carried out to the property without the appropriate consents or the listed building consent conditions have been breached, you will need to consider the extent of the breach. 

The heritage surveyor will normally guide you as to whether you will be able to obtain retrospective listed building consent for the breach and which breaches could be problematic.

If the kitchen extension was not approved, there are various things that you can do as part of the conveyancing process to alleviate any stress or anxiety about the consent, and ultimately protect yourself.

The way to remove the risk completely is to reverse the alteration – if possible – or for you or the seller to apply retrospectively for consent for the kitchen extension. 

You may elect to negotiate a conditional contract with the seller, which stipulates that you will only complete the purchase of the property when the seller has obtained retrospective consent for the kitchen extension if it was unapproved.

Most sellers will be reluctant to agree to this approach because if they apply for retrospective consent and are unsuccessful, then it draws the issue to the attention of the local planning authority who are then likely to serve an enforcement notice on the seller in relation to the alterations.

Alternatives include negotiating a price reduction to cover the costs and hassle of obtaining retrospective consent for the extension after completion. 

Any price negotiation should include recognition of the fact that the buyer will be accepting the risk for the lack of consent, and any liability that comes with it.

If you are a cash buyer, then you can decide to proceed on the basis that you will accept the risk for the lack of consent. 

However, if you are using a mortgage, the bank will require you to obtain indemnity insurance, which will cover you and the bank against the cost of rectifying unauthorised alterations. 

You will need to discuss the indemnity insurance policy with your solicitor though as they often include provisions that invalidate the policy if you approach the local planning authority for consent for any works in the future.

For example, if you want to carry out alterations to another part of the property and apply for consent then this could invalidate the policy. 

There are some more bespoke indemnity policies available that might get round this problem but these policies can be costly or have a high excess.

Another factor to bear in mind is that if the kitchen extension was carried out without proper consent, then you, in turn, will have to deal with this problem as part of any future sale of the property unless you and the seller can resolve the issue now, either by removing or adapting the alterations or by obtaining retrospective consent.

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