Am I able to reclaim my reservation fee? Unable to remove an old charge on registry.

[Dinoman]

Hi all,

I’d be extremely grateful if someone could be so kind as to take a quick look at the below reservation contract and offer their feedback as to whether I can claim a refund should I withdraw from the sale?


OVERVIEW:

I had an offer excepted on a house back in June 2021 and I had to sign a reservation agreement with a view to exchanging contracts within 3 months, and completing within 1 month thereafter.

The seller inherited the property; however there is an old charge from the 80’s on the land registry and the seller does not have a discharge certificate to prove the mortgage has been paid in full.

The bank dealing with the old charge is Santander and according to the seller’s solicitors; Santander stated that the charge would be remover some three weeks ago; however no discharge has been registered with the land registry in the past 30 days.

The Estate Agents are also my letting agent, and upon the acceptance of my offer on their client’s property, and to my annoyance; they inform the landlord, who in turn decided he want to sell the property I am currently renting, so I was given 4 months’ notice to vacate which expires on the 18 October, so unless the sale is completed before then? I will effectively be homeless, but can temporarily lodge with a friend.

I can’t afford to enter into a 6 month rental agreement and pay a mortgage simultaneously, so I need to way up my options sooner rather than later.

Thank you,
Jon


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CONFIRMATION OF RESERVATION

Purchase Type: Residential (Owner Occupier) Investment (Investor) Funding: Cash Mortgage Purchase Price: £118,300

Exchange of Contracts Due Date: 17th August 2021 (12 weeks from reservation agreement being issued)

Purchasers Details: xxxxxxxxxxxx

Standard Terms:
1. Exchange of contacts is due within 12 weeks of reservation.
2. Completion to be within 4 weeks of exchange of contracts.
3. Upon confirmed completion, the reservation fee will be refunded to the buyer.
4. Proof of funds are to be provided to Martin & Co.
5. By signing this document, the purchaser confirms that the funds for the reservation fee (and deposit) are coming from the purchaser’s personal bank account. Should the reservation fee (and deposit) be paid other than the purchaser’s personal bank account, please provide details below of the account from which the reservation fee (and deposit) will be paid.
6. Please note the sale/purchase only becomes legally binding at exchange of contracts.

I/ We wish to purchase the above property and have paid the reservation fee of £500.

The agreed price is dependent on exchange of contract within 12 weeks from reservation. In the event the reservation agreement is cancelled by you the purchaser or the purchaser has not affected an exchange of contracts by the stipulated date, the full reservation fee will be retained to cover administration / agency costs.

Should the vendor withdraw the property for any reason, the full reservation fee will be refunded.

I understand that by signing this Reservation Form I, as the signatory (regardless of whether any co-Purchasers or the eventual names purchaser(s) under the sale contract have also signed) agree to pay full non-refundable Reservation Fee and agree to be bound by any other terms stated on this Reservation Form. (It would, however, be preferable to have the signatures of all buyers so that we have full details which will prevent delays with amendments to the contract documentation later on).

I understand my (£500) Reservation Fee is Non-Refundable.
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[echat11]

I think you need to ask for a progress report from the seller / solicitor, you need to tell them that 3 weeks are up, 'the charge' issue should have been sorted out by now. Explain your circumstances to them and that you have nowhere else to go (a short stay with a friend). If you pull out, then the fee is non refundable, but if the seller pulls out then you will be refunded the full fee.

[des8]

However if the timescale set by the estate agent has been breached by the EA's client (the seller) it seems unfair the OP should be penalised for pulling out, unless there are reciprocal penalties.

Wonder if R0b has any ideas?

[R0b]

I'm not familiar with reservation agreements but to answer your initial question, according to the agreement if you withdraw then you lose your deposit.

However, the reservation agreement itself is still a legally binding contract so according to those standard terms, each side is obliged to comply. Failure to comply will be a breach and since there is no limitation of liability clause, it would appear that you could argue breach of contract and claim damages as a result of the seller's failure to exchange and/or complete within the agreed timeframe. However, that doesn't stop the seller from withdrawing from the sale and taking a hit on their legal fees if they so wish, if any. Equally you would be liable for your own fees though you may be able to claim them back under the breach of contract argument.

In short, you should have had a professional look over the agreement before signing.

Couple of other points that spring to mind:

- Have you spoken to your solicitor/conveyancer about this and have they given you any options or solutions? If not, that would be the first port of call.

- I wonder if the estate agent may be in breach of confidentiality by disclosing your personal circumstances to the landlord without your permission. Might be worth checking your tenancy agreement to see if there's anything about notifying the landlord if you intend to purchase a property. Also worth checking is any code of practice the EA has signed up to and see what it says about confidential information or disclosure of information to third parties.

[Dinoman]

Thank you all very much indeed for your responses... your options and guidance are greatly appreciated. Jon

[Dinoman]

I'm not familiar with reservation agreements but to answer your initial question, according to the agreement if you withdraw then you lose your deposit.

However, the reservation agreement itself is still a legally binding contract so according to those standard terms, each side is obliged to comply. Failure to comply will be a breach and since there is no limitation of liability clause, it would appear that you could argue breach of contract and claim damages as a result of the seller's failure to exchange and/or complete within the agreed timeframe. However, that doesn't stop the seller from withdrawing from the sale and taking a hit on their legal fees if they so wish, if any. Equally you would be liable for your own fees though you may be able to claim them back under the breach of contract argument.

In short, you should have had a professional look over the agreement before signing.

Couple of other points that spring to mind:

- Have you spoken to your solicitor/conveyancer about this and have they given you any options or solutions? If not, that would be the first port of call.

- I wonder if the estate agent may be in breach of confidentiality by disclosing your personal circumstances to the landlord without your permission. Might be worth checking your tenancy agreement to see if there's anything about notifying the landlord if you intend to purchase a property. Also worth checking is any code of practice the EA has signed up to and see what it says about confidential information or disclosure of information to third parties.

Thank you very much for the in-depth reply.

Having now looked back over my email correspondence; it appears that the sellers were unaware of any reservation agreement. As the Estate Agents are acting on behalf of the sellers who were unable to complete on time; does this mean I can still claim breach of contact, albeit against the Estate Agents?

And would I also be able to claim damages form the Agents i.e.; my conveyancing fees?

Unfortunately I do not have anything in writing to prove that the Agents informed my landlord that I had purchased a property form them, my guess is that they would simply state that If was coincidental that he informed them within one week of the Agent excepting my offer on the property.

I’ve been holding back from contacting my conveyancer for now as I didn’t want them to deviate away from the sale side until I was sure of my next move, which is why I posted on here as the Senior members have been incredibly helpful in the past with their advice and feedback.

Thank you,
Jon

[R0b]

Whether the sellers were unaware or not in my view is not your problem. That problem lay between the sellers and the estate agent if they are signing their clients up to things without their knowledge or consent.
Your contractual relationship is with the sellers, not the EA unless there is something in the document that says you can sue them or that they're party to the contract.
Really your conveyancer is in the best position to advise on next steps and whether it is necessary for further legal advice possibly from a property litigation lawyer, but whether you want to go that far is entirely up to you as that will be an additional sum of money you have to pay out for. I don't see any harm in putting them on notice that they are past the date of completion and the hold up is on their end for which you are incurring additional costs and reserve the right to seek the recovery of those - but I would run that by your conveyance first and get their thoughts.