Selling a Property with Notice to Complete?

Published by Property Saviour
The UK's No.1 Fast House Sale Company

July 23, 2018 - Read time: 3 minutes

Selling a Property with Notice to Complete? 1

Are you selling a property with notice to complete?  Or perhaps you are buying a property and you have been served with a notice to complete?  This blog will help explain what to do if you’re a seller who has to serve a notice to complete to your buyer. We will also explain what to do if you’re a buyer and you are unable to purchase the property?  You still need to get legal advice we were unable to complete purchase of a property whether you’re a buyer or a seller. This blog post is for information purposes only and does constitute legal advice.

So you are selling a property with notice to complete?

A notice to complete purchase of a property is usually served once you have exchanged contracts and are unable to complete on the agreed completion date, usually due to lack of funds.   A notice to complete gives the buyer a further 10 working days to complete the purchase or risk losing their deposit.

Perhaps you’ve sold your property at an auction or you have bought a property at an auction?   In an auction, the contracts are exchanged at fall of the hammer. If you have sold or bought a property in an auction then, you have purchased a property unconditionally.   You then have 14 days or up to 28 days to complete the purchase. Once the contracts are exchanged, the buyer has legally committed to purchasing the property at the agreed price.   If the buyer pulls out of the sale after the contracts have been exchanged then, the seller can sue them for any loss this can cause and the seller can keep the deposit. When the seller resells the property, if he or she sells it for less than agreed price then he or she can sue the buyer for the difference in price and all the associated costs including legal and estate agent fees.  

In the current property market where there is a lot of uncertainty,  there are many buyers who are unable to complete the purchase of a property due to lack of funds.   If you’re a seller and you have served notice to complete on your buyer and still need to sell the property we can help.  We are genuine cash buyers who are in a position to quickly exchange contracts and complete within days. We would be more than happy to confirm this by providing you with proof of funds and  details of our solicitor who has acted for us on numerous purchases.

How to serve a notice to complete on your buyer?

The notice to complete is usually served by the seller’s solicitor.  The standard conditions of the contract requires the buyer to complete the purchase within 10 working days of a notice to complete being served.   Timing is of the essence when a notice to complete has been served. Should the buyer fail to complete the purchase, after 10 working days of notice to complete has been served, then the seller can rescind the contract and therefore it will forfeit the deposit. The seller may keep the deposit.

Does the seller have to return the deposit?

The answer is it depends.  the buyer can obtain the return of the deposit on following grounds:

  • If the buyer is able to show that the notice to complete is invalid then he will be entitled for the return of the deposit.   The notice may have not been drafted correctly or served correctly or the seller may not be in a position to satisfy the buyer that they are ready,  willing and able to complete the sale of property. If you are the seller of a property you need to understand that serving a notice to complete can work against you because if the buyer is ready, willing and able to complete and you are not then he or she can pull out the contract.

There is a common scenario where the buyer is willing to pay a deposit for the seller to spend the deposit or perhaps another purchase or something else.  For example let’s say that Mr. and Mrs. Smith have sold their London property for £2 million to cash buyers who don’t need to mortgage the property or conduct a survey.  The buyers are ready to exchange contracts immediately but do not wish to complete until December.

The cash buyers have offered a 10% deposit which Mr. and Mrs. Smith would like to invest into their business after the contracts have been exchanged.   Mr. and Mrs. Smith do not wish to wait until December to make the investment into their business. Can Mr. and Mrs. Smith use the deposit in this way?

Answer:   Mr and Mrs. Smith me could have a real problem here.   The usual process is that the solicitor will hold the deposit paid by the buyer.   The Law Society’s standard conditions of sale which govern contracts for sale of residential property stipulates that the seller’s solicitor should not park with a deposit until completion date.

Therefore Mr. and Mrs. Smith solicitor will retain the deposit of £200,000 paid by the cash buyers upon exchange of contracts into their client account and must not release the deposit to Mr. and Mrs. Smith until the completion takes place in December.

However there is an exception:  the deposit can be used prior to completion if the deposit is used on a related purchase off another residential property.  

In Mr. and Mrs. Smith’s case,  their cash buyers must agree to the standard conditions of sale being amended so that their solicitor can pass the deposit on to Mr and Mrs Smith earlier than the completion date.   the cash buyers will be at risk should the Mr and Mrs Smith fail to complete the sale of their property, but have spent the money and can’t return the deposit.

In this case the buyer’s solicitor will advise the client against deposit be used in this way.

Failure to complete following exchange of contracts.  What is the penalty?

A deposit of more than 10% is defined as a penalty by the courts.   A penalty would have to be refunded to the buyer in full if the seller has failed in their obligation.   

Can the seller sue the buyer for not completing?

The seller can sue the buyer for damages.  The damages are made up of subsequent resale and wasted costs.   Credit is given for the deposit so that the seller doesn’t recover his loss twice.   This credit is also referred to as penalty.

As well as forfeiting the deposit, a seller can also sue for damages (loss on the subsequent re-sale plus wasted costs). Credit is given for the deposit so the seller does not recover his loss twice. If a seller wants to rescind and forfeit the deposit then the service of a notice to complete is crucial. It is important that in this situation, the seller does not delay, after the notice is served. Any delay can be treated as a waiver of the notice, particularly if discussions are going on with the buyer about completion date. The best thing for a seller to do could be to rescind the contract and then enter into without prejudice discussions with the buyer about rescuing the sale of property.

Of course, a seller does not need to serve a notice to complete or rescind the contract and forfeit the deposit. As an alternative AND ONLY if the buyer has funds, the seller may wish to apply to the court for an order for specific performance. The buyer will also be liable for damages for the delay in completion. Most buyers default because of lack of funds and so we are more likely to see forfeited deposits than actions for specific performance in the current property market.


It is important to consider the situation carefully before deciding how to proceed when a buyer fails to complete a purchase. In the present property market, a buyer may even be prepared to risk losing their deposit just to get out of the purchase as the deposit may be a smaller sum to lose than the reduction in value of the property due to the falling market.

If you need to sell your property quickly then you may wish to seek services of Property Saviour who are genuine cash buyers. We are ready, willing and able to complete within a few days if needed, depending on your preference.  We are happy to provide proof of deposit and our solicitor can quickly pick up the sale and complete within your timescale. If this is of interest please call us on 0113 320 6700 or make an online enquiry today.

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