Do I Have to Pay Legal Fees if the Property Sale Falls Through?
04 December 2017
There will be 2 types of costs that you will need to pay to your Conveyancer when you are buying or selling a property. These include the costs that will need to be paid to third parties (known as disbursements) and costs for the legal work carried out by your Conveyancer (fees).
The need to pay legal fees if your sale falls through will depend on the terms and conditions of your agreement with your Conveyancer. Usually disbursements will still be payable if the sale falls through.
With Co-op Legal Services all Conveyancing quotes include a No Sale No Fee Guarantee. The Conveyancing fee you are quoted for the agreed work is the fixed Conveyancing fee you pay.
Disbursements are the costs that will need to be paid to third parties so that they can provide information about the property, which is needed for the sale or purchase to progress. Some common disbursements include:
- Fees for obtaining official copies from the Land Registry
- Fees for registering a sale or purchase at the Land Registry
- Fees for Searches to be carried out by local authorities or water companies
- Fees for information packs produced by landlords
- Fees for bankruptcy searches to be carried out.
The likely disbursements, or costs that will need to be paid to third parties will usually be requested up front. If this is the case, then it’s unlikely that these costs will be refunded should your sale or purchase fall through. This is because the payment has already been made and the work has already been carried out. As such, the payment will not be recoverable from the company who provided the service or information.
There are also some additional costs that may become payable as a disbursement if the sale or purchase falls through.
For example, your landlord may request an ‘undertaking’ from your Conveyancer. If the landlord provides documents or drafts relating to the property, then they will charge a fee for this. Requesting an ‘undertaking’ means that the Conveyancer would need to pay the landlord’s fee when the sale or purchase completes.
As such, your Conveyancer will not have paid these fees yet, but if the sale falls through the fee will usually be demanded from your landlord straight away. In anticipation of this your Conveyancer may ask for the money from you before they agree to provide the undertaking. They will then keep hold of this money until the fee is payable to your landlord.
The vast majority of Conveyancing transactions are carried out on a fixed fee basis and include a set amount of work. If your property sale or purchase is complex or you have opted for a personalised service you may be charged an hourly rate.
The fee that you will need to pay for the legal work that’s carried out on your property sale or purchase will be agreed in your terms and conditions. You will need to check the terms and conditions carefully to establish what is payable and what is not.
Some Conveyancers offer a ‘no completion no fee’ service, so if a sale falls through there will be no fees for legal work carried out. The disbursements incurred will still be paid but the agreed ‘fee’ will not become payable.
If your terms and conditions are not on a ‘no completion no fee’ basis they may be payable in full or in part, depending on what you agreed to when instructing your Conveyancer.
Some Conveyancers may state that work carried out will become a trigger for a further fee to become payable. For example once contracts are drafted then a fee becomes payable and if a report on title is produced then another fee becomes payable. This protects you to an extent as you will only have to pay for the work that has been completed.
When instructing your Conveyancer, it’s important to read the terms and conditions carefully so you know how much you may be liable to pay should the sale or purchase fall through.