Can A House Sale Fall Through At Closing?

Residential house with a climbing plant on the facade

For UK home sellers reaching the completion stage, the finish line is in sight. Legal contracts have been exchanged, terms agreed, and finances arranged. Now it’s time to finalise the property transaction and get the keys handed over to the new owner. While rare, sales can still hit snags and fall through even at the very final step – completion. This nightmare scenario can leave sellers stranded. Understanding completion risks helps you safeguard the sale.

What is Completion?

Completion marks the legal point at which a residential property sale is finalised and ownership officially transfers to the buyer. It happens after an exchange of contracts.

At completion:

  • The buyer pays the full agreed property price.
  • Ownership deeds and keys are transferred to the buyer.
  • The property legally belongs to the buyer from this point forward.
  • Stamp duty and outstanding agent/solicitor fees are paid.
  • The purchase funds clear into the seller’s account.
  • Utilities, council tax etc switch over into the buyer’s name.

Completion represents the finish line all sellers work towards. But it’s not fully done until the ink dries on all paperwork and funds fully clear.

Can a Sale Fall Through at Completion?

While rare, a property sale can fall through at the very final stage of completion, even after successfully exchanging contracts.

This may happen if:

  • The buyer’s funds or mortgage does not come through on completion day.
  • Documentation like energy certificates is still outstanding.
  • Unresolved title deed, boundary or leasehold issues arise.
  • Repairs flagged in the final survey have not been addressed.
  • The property suffers significant last-minute damage.
  • The seller goes bankrupt or into mortgage arrears before completing.
  • The buyer or seller dies before completion takes place.
  • Unexpected delays or issues arise with related sales in a property chain.
  • One party simply gets cold feet and refuses to complete.

Even successfully exchanging contracts does not guarantee completion. Buyers and sellers should retain professional support until the transaction is fully completed.

Consequences of a Fall Through at Completion

If a sale collapse happens at the completion stage, the implications for both parties can be significant:

For the Buyer:

  • Loss of expenses spent on surveys, legal fees and moving preparations.
  • Possible loss of the full deposit amount if the buyer breached the contract.
  • Delay costs in finding and securing a new property.
  • Complications arranging temporary accommodation.
  • Credit rating impacts if mortgage finance falls through.

For the Seller:

  • Financial loss from relisting, legal and moving expenses.
  • Still having to meet mortgage repayments and bills on the unsold property.
  • Knock-on impacts for their onward purchase and moving plans.
  • Delayed timeframes to find another buyer and agreed on new sale dates.
  • Possible dispute over the return of the buyer’s deposit money.

After investing significant time, money and emotion into the transaction, a fall-through at the last stage can be crushing for all parties. This worst-case scenario should be avoided at all costs.

Reducing the Risk of a Fall Through at Completion

While rare, completions can collapse, even at the eleventh hour. Here are tips for buyers and sellers to limit risks:

For Buyers:

  • Ensure financing and lender approvals are in place well in advance.
  • Confirm completion funds are readily available, including the full purchase price.
  • Check surveys and legal documents thoroughly before completion day.
  • Arrange building and home insurance ahead of time to activate on completion.
  • Understand the legal completion process and your obligations. Seek guidance.
  • Declare any potential delays or issues in your related property chain.
  • Plan practically regarding the move, changing utilities etc.

For Sellers:

  • Double-check all paperwork like the EPC, warranties and leasehold packs are complete.
  • Follow up that critical repairs raised in the survey have been finished.
  • Alert the buyer to any changes to the property since the exchange, like damage.
  • Ensure no title issues have arisen that could prevent signing over the deeds.
  • Confirm your solicitor has the signed transfer deed ready for the completion date.
  • Verify buyer finance, funds availability and onward chain progress.
  • Prepare logistically for vacating and delivering the property to the buyer.
  • Stay flexible on the completion date if reasonable delays crop up.

Robust preparation and communication by both buyer and seller are key to ensuring a smooth completion. Leave nothing to chance.

What Can Hold Up Completion?

While not necessarily jeopardising the entire sale, several issues can delay the completion date and settlement of funds:

  • The buyer’s lender is late releasing mortgage funds into solicitor accounts.
  • Errors or missing details in the transfer deed that must be corrected.
  • Outstanding work orders or consents are needed before keys can be handed over.
  • Seller’s delays with vacating the property fully as agreed.
  • Buyer’s property sale in a chain sequence taking longer than anticipated.
  • Backlogs getting completion authorisation from mortgage lenders or solicitors due to holidays etc.
  • Registration delays at the Land Registry prevent deeds from changing hands.
  • Snags arising from final surveys must be rectified.
  • Disputes over repairs responsibilities or property condition upon handover.
  • Illness or other personal circumstances impacting the buyer or seller.
  • Weather events delay the buyer or seller from accessing the property.

Most completion delays or snags can be addressed within several weeks. If more extensive issues do arise threatening to derail the sale, it is best to be prudent and delay completion rather than risk a total collapse. Be upfront with the other party if your completion timeframe slips. Renegotiate dates in good faith if reasonable.

How Fall Throughs Can Impact Chains

If a property sale falls through at completion, it can have a domino effect on other transactions in the buyer or seller’s chain.

For example:

  • Seller A’s sale falls through so they cannot proceed with buying Buyer B’s property. This derails Buyer B’s linked sale.
  • Buyer C’s purchase falls through, so they cannot sell to Seller D, causing D’s onward sale to also collapse.

This demonstrates how interdependent sales can unravel if one link fails at the final step. That’s why buyers and sellers mid-chain face added completion pressures. Extra contingencies through bridging finance or delaying exchange until the last minute may be necessary to prevent wider chain catastrophes if an individual sale falls apart right before completion.

Can You Pull Out at Completion?

Once exchange contracts are signed, the buyer or seller should not pull out of the sale at the last minute without just cause. Even at the completion stage, both parties are legally bound to finalise the transaction.

However, if unexpected major issues arise, either side may be able to delay or halt completion with valid lawful grounds. For example:

  • The buyer’s mortgage finance unexpectedly falls through.
  • The seller receives notice of repossession proceedings right before completion.
  • The property title has defects preventing a legal handover on completion day.
  • The property is damaged before handover, breaching the exchange contracts.
  • The buyer does not transmit the full purchase funds in time.

Even with legitimate reasons, withdrawing at completion causes huge expense and disruption after coming so close to exchanging contracts. All other options should be exhausted before abandoning completion at the death. Communicate fully with the other party first before taking such nuclear action. They may be willing to delay completion or find compromises if reasonable. Withdrawal ought to be a last resort.

Conclusion: Protecting the Sale at the Final Stage

The trauma of a fallen-through house sale does occasionally happen at the very final completion stage, even after successfully exchanging contracts with the buyer. While rare, this worst-case scenario, sometimes referred to as “a squat house,” can leave sellers financially and emotionally scarred. Staying vigilant, allowing sufficient time, securing funds early, having legal safeguards, and maintaining clear communication between both buyer and seller leading up to completion day will best protect against a disastrous 11th-hour collapse. While never guaranteed, proper precautions make an outright completion failure far less likely. Keep your cool at the finish line. With prudent planning and protection, buyers and sellers can steer the ship safely into the harbour together.

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