Conveyancing's Tweedledum and Tweedledee: Gazumping and Gazundering
- AuthorPaul Hajek
The projections for the number of Conveyancing transactions in 2011 look bleak.
Mortgage famine; weak confidence; fear of unemployment; too many sellers; pernicious Stamp Duty regime are the usual suspects. Take your pick!
But even when you are lucky enough to find a property or a buyer, the road or the journey (if you are an X Factor or Strictly contestant) is still frought.
Up pops the dreaded Gazumping and Gazundering: Tweedledee and Tweedledum, if you will.
Gazumping is where a Seller refuses; Gazundering is where a buyer refuses (normally at the last minute) to authorise his or her Conveyancing Solicitor to exchange contracts on their property.
The reason: the Seller has found another Buyer at a higher price (Gazumping); or the Buyer thinks the Seller is desperate enough to accept a reduced offer (Gazundering)
Whether or not you consider either Gazumping or Gazundering to be a rather dastardly ploy, it inevitably ends in disappointment for one of the parties, who by then will also have been considerably out of pocket.
It can also cause havoc if there is a chain of transactions linked to the particular sale or purchase.
There is nothing legally an unsuccessful Seller or Buyer can do to force a sale, as an offer to buy land in England and Wales is not legally binding unless it is evidenced in writing. For those who like chapter and verse and impromptu quiz questions; originally Section 40 Of Law of property Act 1925 as amended by Section 2 of Law of Property (Miscellaneous Provisions) Act 1989.
Gazumping is almost a natural by-product, in any frothy housing market, but still possible in a reduced market where properties of the right type in the right area come to market infrequently.
Gazundering is more prevalent in a falling market.
Government has in the past tried to diminish the practise of Gazumping.
If you take yourself back to heady days of 1997 (housing bubble before last), you may recall the tale of a Labour M.P., who was so appalled by being gazumped on his proposed house purchase, that he called for a reform in the Conveyancing and home selling and buying process.
This indignation eventually morphed into the Home Information Pack, the HIP in August 2007.
The irony was that HIPs actually facilitated Gazumping.
New purchasers, armed with a proper HIP, were able to offer more money for the property and attend the Seller’s Solicitors offices and physically exchange contracts.
Speak to your Conveyancing Solicitor about “Lock Out” Agreements.
Normally used to ward off Gazumping, these are binding deeds which ensure that a Seller, provided the Buyer is ready to exchange contracts within a defined period, cannot sell to anyone else.
By extension, a Lock Out might be used in favour of a Seller, but it is difficult to see a Buyer wholeheartedly agreeing to enter in to such an agreement.
However, the more proactive and efficient your Conveyancing Solicitor, the quicker you will get to an exchange of contracts and aviod the Buyer getting twitchy.
As always the best advice is to ask your Conveyancing Solicitor for guidance.
Photo: Disney's Alice in Wonderland.