Solicitor Fees When a Buyer or Seller Pulls Out

Written by Nicola Ryan

21st Oct 2022 (Last updated on 14th Dec 2022) 10 minute read

Do Solicitors Charge If Sale Falls Through?

Solicitor charges are dependent on how far along the sale is. The further along the process you are, the more money you will likely have to pay. If your solicitor has a No Sale No Fee guarantee, you should be able to recoup your legal fees, although any conveyancing disbursements will not be reimbursed.

Before the Exchange of Contracts

Either side can pull out of the transaction before the exchange of contracts without any legal repercussions. Depending on how far along the process the transaction was, you may be able to request the other party cover your fees.

You will need to check over the agreements that you have signed with your estate agent. This is because there may be clauses that prevent you from withdrawing from the transaction without penalties. This includes paying the agent’s fee.

You will also need to check the contracts that you signed with your conveyancer in case you have to pay any outstanding fees with them.

Other costs that you may have to pay include legal fees, disbursements, and conveyancing searches. Again, this depends on how far along the process you are.

Before Completion

If the contracts have been exchanged, this can cause problems if the sale falls through before completion day. This is because both sides are legally bound to the transaction once the exchange of contracts has happened. If one side pulls out of the transaction, financial penalties can be incurred. This is because it is seen as a breach of contract.

If a buyer pulls out of the sale before completion, the seller is entitled to keep the deposit. On top of this, the seller is also entitled to sue for extra costs such as legal fees and disbursements. This is especially the case if this has impacted the value of the home.

If the seller withdraws from the sale, they will have to pay the buyer their deposit plus interest. The buyer can also request that the seller covers their legal fees and disbursement costs.

Why Do Buyers Pull Out?

If your buyer has pulled out of the transaction, this can cause all sorts of problems, especially if you have a property lined up to purchase yourself. If this happens to you, evaluate why your buyer has pulled out. This can help you to avoid facing a similar situation in the future. Here are some of the most common reasons why buyers pull out:

Change of Heart

Buyers sometimes have a change of heart when it comes to the property. This can be influenced by market conditions or simply finding another property that suits their criteria better. An efficient conveyancing process with minimal delay is best as it prevents your buyer from being put off and ensures the sale goes smoothly.

Gazumping

Gazumping is when a seller accepts another offer from a second buyer after accepting an initial offer from their first buyer. This tends to happen if the second buyer is offering a higher amount. Some sellers then use the gazumping as an opportunity to increase their house price in the hope that the first buyer will outbid the second. However, this can turn buyers off and they will then pull out of the transaction.

Gazumping is a huge problem, especially for those who are part of a property chain. Buyers in this situation may feel under a lot of pressure to up their offer if they have been gazumped. This is why it is best for buyers to have some backup properties just in case this happens.

Negative Survey Results

Lastly, gazundering can happen as a result of bad survey results. The survey report is one of the most important aspects of the process as it will highlight any defects or issues with the property. There may be defects pointed out in the survey that you are not aware of.

Most survey reports come with recommendations for maintenance and cost estimates. While some issues may not faze your buyer, they may use it as an opportunity to renegotiate their offer. Other buyers may not want to deal with the defects and pull out of the sale completely.

Solicitor Fees When a Buyer Pulls Out

If a buyer pulls out of a transaction, they can expect to pay an average of £1,655 for freehold properties or £1,825 for leasehold properties. Buyers should also keep in mind that they have to also pay for the property survey to be conducted.

Here is a breakdown of the solicitor fees that a buyer can expect to pay before the exchange of contracts. These costs are based on the £277,000 national average house price:

Solicitor Legal Fees - £1,320 for freehold/£1,490 for leasehold

The main portion of your conveyancing fees will be made up of the solicitor's legal fees. The cost is usually less for freehold properties. This is because leasehold properties require more paperwork. If your solicitor has a No Sale No Fee guarantee, you may be able to recoup this cost.

Conveyancing Searches - £290

The buyer must pay for conveyancing searches to be conducted. The searches will detect any environmental problems that can affect the property and surrounding area.

Bank Transfer Fee - £40

The bank transfer fee is charged on transfers over £60,000. Sometimes banks will quote their transfer fees without VAT. Therefore, it’s always best to double-check whether the transfer fee does or does not include VAT.

Anti-money Laundering Checks - £5

The anti-money laundering check is conducted when the buyer is paying in cash or through numerous accounts. It simply ensures that the money is legitimate.

What Should I Do if My Buyer Pulls Out?

If your buyer pulls out of the transaction, there are options that you can take. It’s important to be prepared in case your buyer does pull out, especially if they do so before the exchange of contracts.

Don’t rush the sale

Not rushing the sale is the most important thing to keep in mind. A lot of sellers feel the pressure from the monetary loss and drop their asking price. However, you can keep your asking price in the hopes that another buyer will purchase the property.

Asking for proof of finance

To avoid future buyers from pulling out of the sale, you can request proof of finances earlier in the process. This can include bank statements and a mortgage agreement in principle. You can also request a non-refundable deposit from future buyers to ensure that they are serious about the purchase.

Complete your own survey

You can also have your own survey completed. This is a good idea if your buyer has pulled out due to negative survey results. Having your own survey conducted will detect any issues and you can decide to fix these problems or reduce your asking price accordingly.

Why Do Sellers Pull Out?

There are also instances when a seller pulls out of a transaction. Again, this can be for a variety of reasons and can cause issues for buyers who are part of a property chain. Sellers who pull out after the contract exchange are liable to pay high fees as the house sale is legally binding at this point. Here are some of the reasons why sellers pull out:

Change of Heart

Just like buyers, sellers may also have a change of heart. Sellers who have lived in their property for a long time may feel sentimental and regret putting their house on the market. If you are a seller, really think through why you want to move home and make sure that it is definitely what you want to do.

Gazundering

There is also a chance that gazundering may cause the sale to fall through. This is when the buyer drops their offer at the last minute, putting pressure on the seller to accept. While this can be an effective technique, it can cause the transaction to fall through. Gazundering is a gamble as sometimes it may work and sometimes it might not.

Therefore, there are certain ways that you can ensure that you don’t fall victim to gazundering. These include:

• Setting a fair price
• Planning a limit
• Be honest

Market Conditions

Lastly, sellers may withdraw from the sale if the market takes a downward turn. The property market fluctuates constantly and there are good times and bad times to sell. Therefore, if house prices start to dip, sellers may be reluctant to sell as they may not receive the offer they want.

Solicitor Fees When a Seller Pulls Out

Sellers pay an average of £1,315 in solicitor fees for freehold properties. When selling a leasehold property, the solicitor fees are approximately £1,465.

Here are the various solicitor fees that a seller will have to pay throughout the conveyancing process. The costs provided are based on the national average house price of £277,000:

Solicitor Legal Fees - £1,270 for freehold/£1,420 for leasehold

Solicitor legal fees are lower for sellers compared to buyers. This is because there is less paperwork. However, the legal fees will still take up the bulk of your total conveyancing fees. Again, if your solicitor has a No Sale No Fee policy, you shouldn’t lose this cost if the buyer pulls out, although you may lose it if you pull out.

Bank Transfer Fee - £40

The bank transfer fee is the same amount for sellers. Make sure that the cost you are quoted includes VAT to avoid an unexpected extra cost.

Anti-money Laundering Checks - £5

Anti-money laundering checks are also conducted on the seller to ensure that all money is legitimate and declared.

What Should I Do If My Seller Pulls Out?

When a seller pulls out of a transaction, it can cause a lot of inconveniences, especially if you are far along in the conveyancing process. There are many reasons why sellers withdraw from the transaction. There are options buyers can choose from in a bid to get their dream home or receive compensation.

Before Contracts Are Exchanged

A property transaction is only legally binding if the exchange of contracts has not occurred. This means that the buyer or seller can withdraw from the transaction without any legal repercussions.

However, if your seller has pulled out of the transaction before the exchange of contracts, there are some options you can consider.

• Higher offer
• Compensation
• Have a back-up

After Contracts Are Exchanged

If the contracts have been exchanged, pulling out of the transaction can be more complicated. This is because pulling out of the transaction after the exchange of contracts means that the contract has been breached. Therefore, this means that there are likely to be financial penalties and it can take some time to withdraw from the sale.

If you are a buyer and your seller has withdrawn from the transaction, there are multiple options you can choose from. This is dependent on what outcome you want.

• Notice to Complete
• Higher offer
• Ask them to pay for the survey

Finding a Conveyancer

At Compare My Move, we can connect you with up to 5 licensed conveyancers. You can compare quotes and save money on your conveyancing fees.