What Happens if Your Buyer Pulls Out After Exchange?

Can a Buyer Pull Out After Exchange?

In law, a buyer who has exchanged contracts is bound to complete the purchase on the agreed completion date. However, pulling out after exchange, in the sense of simply refusing to complete, does happen, despite the serious financial and legal consequences.

A buyer cannot "cancel" the contract without penalty. The question is not whether they can pull out, but what happens when they do.

The Buyer Loses Their Deposit

The most immediate consequence for a buyer who defaults after exchange is the forfeiture of their exchange deposit. This is typically 10% of the purchase price, on a £350,000 property, that is £35,000.

The deposit is already held by the seller's solicitor (it was transferred at exchange). The seller's solicitor can release it to the seller once the seller has formally rescinded the contract following the default. The seller does not need to go to court to keep the deposit.

The Seller's Options After Default

Once the completion date has passed without completion occurring, the seller has a defined legal process to follow:

**Step 1, Issue a Notice to Complete.** The seller (through their solicitor) serves a formal Notice to Complete on the buyer. This gives the buyer ten working days to complete the purchase. The notice must be in the correct form and served correctly; your solicitor handles this.

**Step 2, Rescind the contract.** If the buyer does not complete within the notice period, the seller can rescind (cancel) the contract. At that point, the seller retains the deposit and can re-market the property.

**Step 3, Sue for damages.** In addition to retaining the deposit, the seller can sue the buyer for any additional losses suffered as a result of the default. These can include:

• Any difference in sale price if the property is re-sold at a lower price
• Additional solicitor fees
• Mortgage interest payments incurred whilst waiting for a new buyer
• Storage and removal costs
• Council tax and utility costs during the additional period the seller had to maintain the property

Pursuing damages requires court proceedings, which are time-consuming and expensive. In practice, most sellers accept the forfeited deposit and re-market rather than litigating, unless the losses are very substantial.

Typical Timeline After a Default

The Practical and Financial Impact

Even with the deposit retained, a post-exchange fall-through is financially damaging. The seller will have:

• Paid solicitor fees for the failed transaction (partially recoverable as damages, but only if you litigate)
• Potentially lost their onward purchase, if they had already exchanged on a purchase, they face a separate breach of contract claim from their own seller
• Spent further weeks or months re-marketing and going through the conveyancing process again
• Missed interest on the expected proceeds during the delay

If the seller had already exchanged on their onward purchase, the situation is particularly complex. They face a simultaneous breach claim as a buyer whilst pursuing their defaulting buyer. Specialist legal advice is essential in this scenario.

Can You Force the Buyer to Complete?

Technically yes, a court can grant an order for **specific performance**, requiring the buyer to complete the purchase. In practice, this route is rarely taken in residential transactions because:

• It requires court proceedings (costly and slow)
• It is difficult to enforce if the buyer genuinely does not have the funds
• The seller is usually better off retaining the deposit and re-marketing quickly

Re-marketing After a Post-Exchange Fall-Through

Once the contract is rescinded and the deposit released, the seller can re-market immediately. Estate agents will typically advise on whether to disclose the previous fall-through to prospective new buyers, whilst there is no legal obligation to volunteer this information, any direct question about whether the property has previously been under offer must be answered honestly.

In some cases, the second buyer on a re-marketed property will negotiate a price reduction, perceiving the seller to be under greater pressure. Having solid documentation of the property's condition and a well-prepared data room, such as that provided by Property Passport UK, helps to minimise delays in the second conveyancing process and project confidence to new buyers.