Think before you commit to an exclusivity clause

Earlier this year, 2010 looked like being the year of the exclusivity agreement.  In a recovering market, this type of “lock out” agreement can be very popular but Barr Ellison Solicitors' conveyancing team would advise buyers to weigh up the pros and cons before paying a premium by way of initial deposit.

“The revival of the Cambridge property market is seeing buyers fighting over properties, so to ensure they don’t lose out they are paying a non-refundable deposit (sometimes up to £15,000.00) to ensure the property is taken off the market for a certain length of time, usually about four weeks”, explains head of Barr Ellison’s conveyancing department, Beverley Henderson.  “Very often this results in them successfully buying the property at the agreed price but if the exclusivity agreement is not drafted correctly it can see them lose both the property and the deposit, not to mention survey fees and a mortgage offer that might not be available next time.”

Exclusivity agreements are most suitable for buyers who are not in a chain, and who do not need a mortgage to facilitate their purchase.  They are usually used in areas where houses don’t come onto the market often and in the higher price bracket. However, a buyer still needs to exercise caution “Whilst most agreements will contain a “get-out” clause should there prove to be something structurally wrong with the property, there are a myriad of things that can lead to the buyer no longer wanting the property which are unconnected with its physical condition and legal title.  If a buyer should decide the property is no longer right for them, they would be at risk of losing the deposit. But when it’s right for a buyer, a correctly drafted exclusivity agreement can give them much needed peace of mind during the stressful house buying process.”

Buyers considering taking out an exclusivity agreement or feeling under pressure to do so, must take advice first. “You should always seek advice, and as experts in this area we really are able to help buyers weigh up the pros and cons and save them a lot of money – and stress – in the meantime.” 

For further information, please contact Beverley Henderson on 01223 417200.

The information given in this article is of a general nature only and should not be considered as advice applicable to any particular situation for which specific request should be made to us.

"I would like to thank Sarah Payne for her patient and professional approach. It took away a lot of the stress knowing that my case was in more than capable hands."
Caroline Turner, Checkendon

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