Whilst so many people think it isn’t legal, gazumping is a risk when it comes to property transactions in Scotland and can be extremely detrimental to buyers. Learn about the key points you need to be aware of, how gazumping works, and what you can do to protect yourself from this distressing phenomenon.
What is Gazumping?
Gazumping is a situation where a buyer and seller agree on a price for a property in Scotland, but the seller then sells the property to another buyer at a higher price or quicker completion instead. This leaves the original buyer out of pocket and without a property. Unfortunately, although it’s very much frowned upon, gazumping is entirely legal in Scotland.
You can find more information on this from The Law Society of Scotland here.
How Does Gazumping Work?
To avoid being gazumped, it’s important to understand how the process works. Gazumping occurs when another buyer offers the seller more money for a property than the original buyer has offered. The seller can then choose to take the other offer and leave the original buyer out of pocket. In Scottish law, contracts aren’t legally binding until they have been broken down into writing in exchange of missives, so gazumping is possible as long as all legal steps are followed.
On that note, you will find that the vast majority of (good) solicitors, will not entertain getting involved in a transaction that involves gazumping. It’s almost an unwritten rule! Please contact us if you will like a referral to one of our recommended solicitors.
One thing people get mixed up with is gazumping and a seller accepting another offer without their knowledge. If you have an offer pending (i.e received but not verbally or accepted in writing) then there is no reason the seller can’t accept any other offer without letting you know or offering an opportunity for you to increase.
This is where you need to be proactive if you want to secure a property. If you sit back and wait, be prepared to miss out – This isn’t being gazumped, it’s a classic case of “snooze you lose!”.
Is Gazumping Legal in Scotland?
Yes, gazumping is legal in Scotland. However, it’s important to note that as contracts aren’t legally binding until missives have been drawn up, buyers and sellers can back out of any deals at any time without consequence. As such, buyers should avoid getting too attached to any property until the missives have been signed, as this is when they will be fully protected from having their offers gazumped by someone else.
When Can a Seller Legally Retract an Offer?
In Scotland, a seller has the legal right to retract an offer until written contracts have been exchanged and signed. This means that once the offer is accepted and missives signed, the other party cannot withdraw it without a valid reason. If this does happen, buyers should consider taking legal action against them. It’s also important to be aware that there is no time limit on when a buyer or seller can legally withdraw their offer in Scotland. Therefore, buyers should consider making an offer as soon as they are ready to secure the property before anyone else and be prepared so conveyancing and move quickly.
Ways to Minimize Gazumping in Scotland
To reduce your risk of being gazumped, buyers should act quickly when presenting their offer. Doing so will not only reduce the chance that the current seller may receive a better offer, but it will also give the intended buyer more time to process any relevant mortgage agreements. Having as much of the preparation for your funding completed in advance will speed this process up considerably.
Communication is key. If there are genuine reasons for any delay, make sure these are clearly communicated to the seller’s solicitor and everyone understands the situation. I’ve seen so many sales fall through over the years by a lack of communication and honesty!
Working With The Portfolio Brokers
It’s hard to know where to start when you want to buy a property portfolio. You don’t want to ‘just’ find one, you want to find the RIGHT portfolio for you! We work directly with you to source the portfolio that fits your budget and gets you the best return on your investment. All with the minimum of drama.
Our proven process and extensive network of sellers means you can get the portfolio you want, that fits your budget. You can find out more about this here.
The first step in buying your portfolio is just a phone call away. Book a Call Now!
