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Have I any recourse for €10k lost in failed house purchases?

Property Clinic: Your property queries answered

I proceeded to sign contracts, send balance of funds etc approximately one month ago. Today I received a call from the agent confirming that they are pulling out of the sale. Photograph: Getty

Thu Oct 26 2017 - 06:00

I’ve been trying to buy a property here in Limerick since my return from many years in the UK. In January I found a property I wanted and won the bidding process and agreed to purchase. Following my mortgage approval the vendors took a great deal of time to reply to queries, and in general delayed things until they ultimately pulled out of the sale in early May 2017.

I had of course commissioned surveys and other services, and my solicitor charged me for his time dealing with contracts etc so the entire process cost me around €4,000.

The vendor pulled out – I was told – because they hadn't realised capital gains tax would be so high on this (a second property). I believe I have no recourse on these costs (despite asking).

Then in late May 2017 I found another property, was told they were keen to move as they had a house they wanted to move to and after a quick bidding process I was successful.

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I proceeded in good faith to instruct surveys, valuations and to get my mortgage offer approved again on this new property. This process took about one month. I then submitted all the items I needed to and awaited exchange of contracts. I was told early on that the vendors did not want to actually exchange until September 18th. I agreed to this as I am in no rush.

I then proceeded to sign contracts, send balance of funds etc approximately one month ago. Today I received a call from the agent confirming that they are pulling out of the sale as their move to another property has fallen through.

I just wanted to check with someone independent if I have any recourse at all on the money and time I have expended on both of these ultimately – through no fault of mine – failed purchases. I have outlaid approximately €10,000 in fees and other costs.

In addition, they have had my deposit and balance of funds for quite a period of time – loss of interest/opportunity cost – and I have missed out on at least one other property I would have been very interested in. In addition, the market in Limerick has changed (gone up 8 per cent or so) from January this year to now.

I just wondered if this situation is typical in Ireland (I had no such issues in Oxford where I purchased in a very buoyant market) and if I have any recourse on the costs I have outlaid.

It has indeed been a frustrating time for you, and it is not uncommon that an increasing number of property transactions are far more protracted than previously. The basis of property purchase in Ireland is caveat emptor, or buyer beware. Coupled with the fact that all negotiations up until contract exchange are conducted on a “without prejudice” basis means that a buyer must carry out all due-diligence in advance before either party is committed to the transaction. This necessitates upfront time and outlay for both parties. Unfortunately, unless expressly agreed in advance, you have no recourse for any outlay involved in your purchase. All parties to property transactions participate at their own expense.

Your outlay of €10,000 for two failed transactions does seem high.

I do have some suggestions as to how you might conduct further negotiations, although in both instances things seemed to progress quite well, with contracts appearing to have issued quickly enough and it was only at the last minute the sales collapsed.

First, be clear with your solicitor as to how he is charging. I presume you have been issued with the standard section 68 letter from the solicitor outlining either the amount of the fee or the basis on which the fees are calculated. As he has acted for you already in two cases, he might be willing to negotiate a lower charge for work up until contracts are exchanged?

When looking at properties, try to establish from the agent what the seller’s onward plans are. “Chain” sales are the most difficult to keep together, and any sale involving negative equity, family law, etc. can have unexpected delays. Be clear with the agent that you need to avoid any delays. Agents are usually privy to the seller’s circumstances and may well advise you to avoid certain properties.

Try to ensure through the agent that contracts will be issued within a specified time after you’ve paid the booking deposit and are sale agreed. Then have a surveyor inspect the property on a very cursory basis initially so that any significant issues might be highlighted. Once you are at the point of signing you can engage the full survey.

Regular contact between you and the agent will also help to highlight any unexpected delays as soon as they arise. After that, I’m sorry to say, it is a question of luck. My own experience is that most sales proceed as planned although not always within the time schedule suggested at the outset.

The purchase of a property at auction does eliminate some of the risk on your behalf. If you are the successful purchaser, you can be sure that the contracts will be signed at the auction, but if you are not you do have the upfront cost and outlay of surveys and having your solicitor examine contracts in advance.

Remain positive and continue searching. The right property is there for you.

Edward Carey is a Chartered Residential Agency Surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie

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