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Unfortunately, in today's fluctuating property market, it is more and more common for purchasers to be gazumped and vendor's gazundered. urban spaces have the solution.
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So what is gazumping?
Gazumping happens when a seller who has already accepted one buyer's offer then goes on to accept a higher offer, pushing the first buyer out of the picture. It can come about at any point before contracts are exchanged, as until the papers are signed there is no legal obligation to either buy or sell. Gazumping is a horror that estate agents are powerless to stop. Under the Estate Agency Act (1979) in England and Wales, estate agents are obliged to pass on all offers received to the seller and it is up to the seller whether or not they consider them. The seller can legally then decide to accept the new offer, regardless of how close the initial buyer is to having the contracts exchanged.
What about Gazundering?
Gazundering is a phenomenon more common to a buyers market. This is where the buyer waits until everybody is poised to exchange contracts and then lowers his or her offer on the property. If the seller refuses, the whole chain may collapse.
How can I help prevent Gazumping/ Gazundering?
Unique to Urban Spaces/Greene & Co, the Goodwill Charter is a legal document, devised along with solicitors Nicholas Green* to help avoid gazumping and gazundering. The goodwill charter helps to stop vendors and purchasers from entering into sales they have no intention of honouring. If either party withdraws from the sale without a genuine reason, within the agreed time period (normally fourteen to twenty one days from the date the vendors solicitors provide a complete package of information), they forfeit the bond they have paid.
We think that this type of agreement will eventually become compulsory when buying a property as it seems to be the only way to prevent gazumping or gazundering. The agreement can be made subject to a purchasers mortgage offer, survey etc, but if either party breaks the agreement for no good reason the money that the agent has been holding will be directly paid to the other party. If both parties keep to the agreement for the agreed time period regardless whether an exchange of contracts has occurred the money will be returned immediately.
*Ingram Winter Green, 26-28 Bedford Row, London WC1R 4HE
Questions + Answers
Q If I pull out of the sale what happens to my bond?
A You lose it. We do not want you entering into an agreement and committing to it unless you are 100% sure.
Q How much money do I have to lay out?
A The amount is agreed between the vendor and the purchaser, we suggest £500 - £1000 each.
Q For how long is the agreement binding?
A This should be discussed by both sides but we would suggest 14 – 21 days.
Q If I pull out of the sale and therefore lose my bond, do you, the agent, keep the money?
A No, we pass it on to the purchaser/vendor to cover their abortive costs.
Q Is signing the charter legally binding?
A We believe so. As with any legal document, you should take advice before signing it.
Q I am happy to sign the charter but would like to make amendments/additions to it. Can I do that?
A Yes, it can be amended to both parties specific needs as long as you both agree.
Q At the end of the time period do I get my money back if I haven’t pulled out of the sale?
A Yes.
Q What happens to the other parties share of the bond?
A If they have kept to the agreement, their money is returned to them. If they have broken the agreement, you will receive their bond.
Downloadable PDF of Goodwill Charter >
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