The next frequently asked question that our expert solicitors will be answering is whether you are able to recover a deposit after losing the property reservation fee after failing to exchange contracts.
Q: I paid a reservation fee of £2,000 to the developer of a flat in order to secure the purchase price. The terms agreed to exchange contracts within 28 days of receipt by my solicitors of the draft contract papers. It was understood that failure to exchange within this timeframe would result in the retention of the fee by the developer towards administrative costs.
My solicitors had advised me that if I didn't exchange contracts within these 28 days that my reservation fee would be forfeited. However, the estate agent told me not to worry about the date and arranged my lender's valuation for the day after the contracts were due.
The valuer was denied access to the property and therefore was unable to carry out a valuation. The developer then withdrew from the deal and retained my reservation fee. I have also found out that the company providing the new home warranty is not a participator in the Consumer Code for New Home Builders. What can I do?
A: By paying a reservation fee you had the option to purchase the flat for the price agreed with the developer not selling to anyone else or raising the price, provided that you exchanged contracts by the set date. Unfortunately, you failed to do this and so the agreement is defunct, but the developer should return your deposit, less administration costs. However, these costs do seem excessive and need to be looked into if not returned.
Your solicitors should have advised you that time was running out on the contract exchange as soon as they received your contract papers. They should also have informed you of the due date for the exchange and agreed that date with the developer's solicitors to prevent situations like this. You need to inform them that you are unhappy with their service and ask them to recover your deposit.
If your solicitors are unsuccessful in recovering your deposit, you should consider making a complaint through their designated complaints handler and if you are still unhappy contact the Legal Ombudsman.
It sounds as though the developer's selling agent misjudged the situation entirely. In this case you could pursue a claim in the small claims court but you will have to prove that the administration costs of the developer were excessive.
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by Tristan Lewis
(Image: Petras Gagilas under CC BY-SA 2.0)