In England and Wales, at the time of writing, the short answer is ‘Yes, he can’. And so can you.
Until such time as all the terms of a legally binding contract have been agreed, recorded in a document and that document has been signed by both parties, then the deal is no more than a ‘gentleman’s agreement’ and has little or no force in law.
Given the time it takes to agree contract terms, undertake searches, obtain funds from further up or down the ‘chain’ of transactions linked to yours, it can sometimes take months for an agreed sale to actually exchange and become legally binding and enforceable in law. This sometimes infuriating delay, perhaps caused by a third party completely divorced from your own transaction, can make a new offer, perhaps for more money or from a ‘cash buyer’ that promises to perform quickly, very tempting to a seller that is being put under pressure to perform by the person he is buying from.
What makes things worse is that every estate agent, whom you should remember is always acting in the best interests of his client (the seller) is obliged by law to report any and all offers received on a property. He would actually be committing a criminal offence if he didn’t report a late offer even if a sale has been agreed subject to contract. In a buoyant market this can result in what is commonly known as ‘gazumping’. Which is simply someone else outbidding you and pinching the sale after you had already shaken hands and agreed on a purchase.
Some buyers and sellers may ask that a second agreement is put in place at the time heads of terms for the sale are agreed subject to contract. This contract may set out various timeframes and obligations on both parties. If either party breaches their obligations under this agreement the other may claim a smaller sum of money to pay towards their ‘abortive’ costs associated with the breakdown of the sale. Some people insist on this but the potential costs and hassle of enforcing such an agreement is often not considered to be worth the effort in practical terms.
The best way to avoid disappointment is to have your mortgage offer ready in principle and make sure that your lawyers and surveyor are ready to act swiftly. A good agent will chase the process along. After all, they want their fee as much as you want to get the sale done. Clear and regular communication with the other side will go a long way to keeping a deal on track.
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