How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask Vineet S Your Own Question
Vineet S
Vineet S,
Category: Law
Satisfied Customers: 344
Experience:  Freelance Solicitor at Self Employed
60556257
Type Your Law Question Here...
Vineet S is online now

I've recently exchanged contracts on a land sale and have

This answer was rated:

Hi, I've recently exchanged contracts on a land sale and have immediately received an invoice from the Land Agent for their fees. I signed what I thought was a no sale no fee contract with the agent whereby I would pay 2% (+VAT) on completion of the sale. The contracts exchanged with the buyer are not unconditional and have many conditions (relating to the current covid 19 pandemic) such as a long stop date which allows the buyer to postpone completion for 6 months (and extend this if necessary), then to have a re-valuation and the option of walking away from the purchase. Am I legally required to pay the agent now or on completion? Also, what happens if the buyer fails to complete? Am I still liable to pay the agents fees?
JA: What steps have you taken so far? Have you prepared or filed any paperwork?
Customer: No. I have not taken any action other that trying to research on line if I have a legal obligation to pay.
JA: Have you talked to a lawyer about this?
Customer: No
JA: Anything else you want the Lawyer to know before I connect you?
Customer: No

Hello, Welcome to JA. I’m Vineet, a UK qualified & practicing Solicitor and I will be dealing with your case today.

It depends on the terms and conditions of the agreement you signed with the Land Agent.

If it provides for payment of the fee at the completion of the sale, then you can withhold the payment till the completion.

Usually in a property transaction, parties get bound at the time of the exchange of the contracts

Regarding your agreement with the Land agent, you need to go through the payment conditions in the said agreement to check when such payment is due.

If you have any follow-up questions, please let me know.

&

If that answers your question, Kindly remember to rate my service by selecting the 5 stars at the top of your screen before you leave JA today.

Customer: replied 5 days ago.
Hello Vineet, In the agents' 'Terms and Conditrions' document under the heading: Sole Selling Rights – Liability to Pay Fees. It states that 'payment is due upon completion of sale or 28 days after exchange if ‘unconditional’ contracts are exchanged.'The contracts exchanged in this case are clearly not ‘unconditional’ with clauses that significantly postpone completion and give the buyer the ability to have the land revalued and the option to withdraw from the sale.I realise that under normal circumstances completion is imminent and follows quickly after exchange of contracts. In this case however it is clear that there will be a lengthy delay and that the buyer is not bound to go through with completion.What I need to know is if I am legally required to pay now, or indeed at all, if the sale doesn't complete? What happens if I pay the agents fees now and the buyer pulls out of the sale in six months time? Will I be entitled to a refund from the agent?

Thanks for your reply.

I will go through the text and will be with you in a short while.

Payment is due-

upon completion of sale or 28 days after exchange if ‘unconditional’ contracts are exchanged.

So , there is the "or " but that clause does not say whichever is sooner or later, to make that absolute.

Hence it is a choice when the payment gets due

(a)the amount either at the exchange (b) completion

Even the exchange of unconditional contracts, which is not the case here. You can defer the payment till the completion,

It would be an unnecessary hassle to get it recovered from the agents if the sale doesn`t complete

If you have any follow-up questions, please let me know

It would be an unnecessary hassle to get it recovered from the agents if the sale doesn`t complete, plus the agents can argue that their part of the contractual obligation was complete, thus they have a rightful claim to that fee.

If you need more assistance, please let me know.

&

If that answers your question, Kindly remember to rate my service by selecting the 5 stars at the top of your screen before you leave JA today.

Customer: replied 5 days ago.
The clause does say 'payment is due upon completion of sale or 28 days after exchange, whichever is sooner, if unconditional contracts are exchanged'. It is the reference to unconditional contracts that causes me to question our liability to pay at all if completion doesn't take place. Completion usually follows very quickly the exchange of unconditional contracts. In this case the contract states clearly that completion will be significantly delayed (a long stop date due to risks associated with Covid19) and may not happen at all. Is the seller still required to pay the agents fees when conditions/clauses within the contract create a significant risk to completion itself? With regards ***** ***** hassle of recovering money from the agent, the agreed sale price of the land (approximately 4 acres with outline planning consent) is £450,000 so we are talking about fees of £9,000 (+VAT). I am not a developer and am selling the land as executor of my late father's estate. This is a considerable sum of money to me and my family. Having no previous experience of buying or selling land I had expected to be able to pay the agents' fees from the proceeds of the sale, that this would be on completion of the sale, and only if completion actually took place. We have no budget to pay this money six months ahead of completion and we certainly cannot afford to pay this money, write it off as abortive sale costs if the buyer pulls out of the sale, and then be liable to pay the same fees again if/when we secure another buyer. I need to establish if I am within my rights to query the liability to pay any fees if this sale does not complete due to the buyer pulling out.

In England and Wales, no party is bound till the exchange of contract of the sale transaction.

Before exchange, parties can back out bearing any cost they have incurred in the process. However, once you have exchanged contracts there is no going back - both buyer and seller are bound to the deal. If they back out after the exchange there are financial implications of such action and a party can file an injunction and force other party for the completion of the sale.

At the exchange of contract, buyers pay a deposit of 10 % of the transaction cost usually,(unless otherwise agreed in the contract) and remaining cost at the completion.

If the buyer backs out after the exchange, then the seller can retain the deposit and claim any cost, losses from the buyer, or can file an injunction for the performance of the contract ( completion of the sale)

So, if the buyer backs out after the exchange, you can retain their deposit and if you pay your agents, you can recover that fee from the buyers as well.

I hope with that answer, you know what you can do to recover your costs from the buyers if they back out after exchange.

If you need more assistance, please let me know.

&

If that answers your question, Kindly remember to rate my service by selecting the 5 stars at the top of your screen before you leave JA today

Vineet S and 3 other Law Specialists are ready to help you