In an era where the UK economy remains fragile and the recent implementation of the Mortgage Market Review means that bank lending can be difficult to secure, many property investors are having to deal with the frustration of the other side failing to complete. At the point when contracts are exchanged for the sale and purchase of a property, both parties are legally bound to complete the transaction on the date specified in the contract. But what happens when the buyer cannot raise the funds to complete on time, or if the seller's related purchase falls through and it no longer wishes to sell? Most residential property contracts incorporate the Standard Conditions of Sale, which set out the steps that each party can take in the event of late completion.
Notice to Complete
If the sale has not completed by 2.00pm on the completion date as a result of one of the parties' default, the other party may instruct its solicitor to serve on the defaulting party a Notice to Complete. This has two consequences:
1. It makes time 'of the essence'. This means that the parties must complete within 10 working days following the date that the notice is served and if only one party is able to complete on that later date it will be able to rescind the contract.
2. The buyer must pay to the seller a deposit of 10% of the purchase price (if no deposit was paid on exchange) or make up the deposit paid on exchange to 10%.