Avoiding a completion headache
What can you do when you have exchanged contracts to buy a property and the seller fails to complete the sale on the appointed date?
You can serve a notice to complete making time of the essence under the contract. If the seller fails to complete the sale of the property in the time specified in the notice to complete you will be entitled to terminate the contract and sue for compensation and loss, or ask the court to enforce it.
However, beware! A notice to complete is a powerful weapon, but it can backfire. Even though it is served by one party on the other, it actually applies to both. If the seller confirms that he is ready and able to complete on the last day of the notice period, and you are not ready yourself, then the seller will be able to terminate the contract instead and forfeit your deposit.
This happened in a recent case following the sale of a property at auction. There was a dispute over whether the purchase price was inclusive of VAT. The buyer served notice to complete on the seller, and the seller conceded the VAT dispute on the last day for completion. However, the completion statement sent by the seller did not make any deductions for compensation for loss and damage caused by his failure to complete on time. The buyer tried to agree the deductions with the seller and placed its solicitors in funds, but did not send the full purchase price across in accordance with the contract. The seller took advantage of the notice to complete, served notice to terminate the contract on the buyer and forfeited the buyer’s deposit.
The court upheld the seller’s actions. The buyer had focused on trying to compel the seller to complete, and on its subsequent claim for compensation, and had lost sight of his own obligation to complete the purchase on time in accordance with the contract.
The case also highlights that sellers are not under a duty to provide a completion statement. It is up to the buyer to make sure that he pays the correct amount for the property. If he chooses to make deductions from the price specified in the contract, he takes the risk that the calculations may be wrong.
Susie Wynne is a partner in our commercial property team. For more information or to contact her please click here.