Lock out the risk of gazumping
5 December 2006
POTENTIAL house buyers could substantially reduce the risk of gazumping by using a little known legal tool called a Lock-Out Agreement.
Recent figures have shown a return to gazumping in some parts of London and a report by Scottish Widows stated that 3.3 million buyers have been affected by it.
However the Lock-Out Agreement is a preliminary agreement which parties can enter into at the beginning of negotiations for the sale and purchase of a property. It gives buyers one month to make their arrangements without the fear of other buyers beating them to the exchange of contracts.
Dawn Lamb, a legal executive at Preston-based law firm, MWR Solicitors, explains: “Many buyers of properties believe that once an offer for the property has been made the seller will withdraw the property from the market giving the buyers the opportunity to exchange contracts within a reasonable time. In the recent buoyant property market buyers have found to their cost that sellers have proceeded with other buyers at higher prices or have started a contract race.
“The Agreement gives the parties a breathing space to enable them to proceed with the sale and purchase without interruption from other interested parties. This will enable the buyer to deal with searches, survey and any mortgage offer required. If at the end of the stipulated time the buyer cannot exchange contracts then the agreement is at an end and the seller is free to negotiate with other buyers.
“It is a relatively simple document consisting of about two pages setting out the intentions of the parties. It lasts for one month and normally the buyer is required to pay a non-returnable deposit to cover the seller’s expenses if the buyer does not proceed.
“The important thing to do is to make clear to your seller at the earliest stage that you will be expecting a Lock-Out Agreement if your offer is accepted and it is sensible to give the reasons why.”
