A contract race is a situation where the seller-client, who may well be under pressure and at risk of losing their own purchase, agrees that they will exchange contracts with whichever of two, or more, prospective buyers is in a position to go ahead first. This is never an easy position to resolve, and sound advice then becomes critically important.
When you are buying a property, ‘subject to contract’, neither you nor the seller are committed. You may need to change your mind for any number of reasons and prior to exchange of contracts are free to do so. It is only fair that the seller should have a similar right.
If you are keen to secure the property make sure your solicitor knows this and insist that he pushes ahead quickly. These days with fax and electronic mail it is possible to agree most deals in a matter of days if not hours when necessary.
When an owner is keen to sell his property quickly and faced with two (or more) similar offers again he may well instruct his conveyancer to send out draft contracts to all the potential buyers. Usually, the accompanying letter will state that it is the intention to accept whichever set of contract documents is returned first, with the appropriate deposit and authority to exchange unconditionally.
This may be an alternative to gazumping (q.v.) the buyer who made the first offer and creating a bidding battle. That could risk alienating both potential purchasers. Whether a buyer wishes to get involved in a contract race is another matter. The decision will depend upon how much work is going to be necessary and whether the other buyers are in a strong position. If faced with this possibility always talk to your solicitor immediately. He can advise what steps he is prepared to take to help you succeed and estimate the time-scale involved.
In these situations, the estate agent has to be impartial and the onus lies with each individual’s solicitor. It should be said that with the various improvements in electronic conveyancing most contract races will now be over in hours rather than days.
There is a further word of warning that should be given. Under the professional regulations that apply to solicitors, licensed conveyancers and estate agents, you will always be told when a second (or additional) contract has been issued and, in effect, a contract race starts.
Unless the seller’s solicitor states specifically that his instruction from the seller-client is to accept the first contract cleared for exchange, you may not succeed in buying the property. It is not unknown for an owner, under great pressure himself, to set up a contract race in order to put pressure on his preferred buyer and have a back-up if this other buyer does not get his contract signed and returned in time.
For example, many new home developers set strict deadline dates. If the seller is buying a new house he may have a specific objective and ask his solicitor to hold a contract until the last minute.
We should also add that some solicitors resent contract races on principle and always advise their clients against getting involved. This may be an understandable attitude for a professional lawyer to take but we believe it should be your decision as a prospective buyer. Even if a solicitor taking this point of view, accepts your instruction and reluctantly enters a contract race, he may not be as committed as your rivals.
races can be won providing you and your solicitor are prepared to tackle the challenge
enthusiastically – and that means more than using first-class stamp for
the pre-contract enquiries. Ask us if you want further advice or an introduction
to an enterprising conveyancer.