It has come to our attention that the COVID-19 lockdown has resulted in some purchasers’ bonds, which were approved prior to the lockdown, being withdrawn due to the expected resultant negative impact upon their financial circumstances.
The basis for this is that it is standard practice for the Banks to reserve the right in their standard Terms and Conditions to withdraw any loan granted right up until date of registration of the mortgage bond in the Deeds Office.
Therefore, if an Agreement of Sale was entered into subject to the purchaser obtaining either a quotation, as referred to in the National Credit Act, or the approval of a loan in principle upon the Bank’s standard terms and conditions and this was obtained by the purchaser, then the agreement is of full force and effect.
The consequences which then flow from the Bank withdrawing the purchasers’ bond are that:-
– the agreement is still binding upon the purchaser; and
– in the event of the seller cancelling the sale, the purchaser will then be liable for damages, for example, the estate agent’s commission, wasted attorneys cost (if any) and the difference in the purchase price if the seller sells for a lesser amount.
It is obviously a personal decision whether the parties pursue their respective damages claims against the purchaser in such circumstances, but from a legal perspective the claim will be valid.