Arnold
CibbuanoGazumping
January 12th 2007 00:35
What is Gazumping?
Gazumping occurs when you have a verbal agreement with an agent or seller to buy a property at an agreed price; and you pay an ‘expression of interest’ deposit. At this point the property is not sold to you and there is no contractual obligation that legally binds you to the final ownership of the property. Gazumping usually happens when the vendor (the person selling the property) has decided to sell the property to someone else, usually for a higher amount.
Prior to the ‘exchange’ of the contracts, the vendor is free to negotiate with other purchasers for a higher offer. If the vendor accepts another offer and exchanges contracts with that party, any purchaser who misses out on the property despite having a verbal agreement to buy it, is gazumped. If you are gazumped, neither the agent nor the vendor is obliged to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or inquiries. However, your ‘expression of interest’ payment must be refunded to you in full.
It is important to protect yourself when it comes to gazumping as most times, the agents are in no danger of financial loss because they get their commission no matter what happens.
A note about Property Contracts
It is an offence under the Property, Stock and Business Agents Act, 2002 for a real estate agent to market a property if they do not have a full copy of the contract for the sale of the property and all its necessary documents at their registered office.
In the next post, I'll cover some tips and suggestions for protecting yourself against gazumping.
Gazumping occurs when you have a verbal agreement with an agent or seller to buy a property at an agreed price; and you pay an ‘expression of interest’ deposit. At this point the property is not sold to you and there is no contractual obligation that legally binds you to the final ownership of the property. Gazumping usually happens when the vendor (the person selling the property) has decided to sell the property to someone else, usually for a higher amount.
Prior to the ‘exchange’ of the contracts, the vendor is free to negotiate with other purchasers for a higher offer. If the vendor accepts another offer and exchanges contracts with that party, any purchaser who misses out on the property despite having a verbal agreement to buy it, is gazumped. If you are gazumped, neither the agent nor the vendor is obliged to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or inquiries. However, your ‘expression of interest’ payment must be refunded to you in full.
It is important to protect yourself when it comes to gazumping as most times, the agents are in no danger of financial loss because they get their commission no matter what happens.
A note about Property Contracts
It is an offence under the Property, Stock and Business Agents Act, 2002 for a real estate agent to market a property if they do not have a full copy of the contract for the sale of the property and all its necessary documents at their registered office.
In the next post, I'll cover some tips and suggestions for protecting yourself against gazumping.
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