Gazumping: Difference between revisions
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The verb "'''gazump'''" means to refuse to formalise a sale agreement at the last minute in order to accept a higher offer. The word is thought to have come from the [[Yiddish]] word ''gazumph'' meaning to swindle or overcharge, which became gangster slang in the [[1920s]]. |
The verb "'''gazump'''" means to refuse to formalise a sale agreement at the last minute in order to accept a higher offer. The word is thought by some people to have come from the [[Yiddish]] word ''gazumph'' meaning to swindle or overcharge, which became gangster slang in the [[1920s]]. |
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With buoyant property prices in the [[British residential property market]] of the late [[1980s]] and early [[1990s]], '''gazumping''' became commonplace in [[England and Wales]] because a buyer's offer is not legally binding even after acceptance of the offer by the vendor. This is because, by s.2 of the [[Law of Property (Miscellaneous Provisions) Act 1989]] and in order to prevent [[dishonesty]], a contract for the sale of land must be in writing, a fundamental principle of [[English law]] that dates back to the [[Statute of Frauds]] of [[1677]]. |
With buoyant property prices in the [[British residential property market]] of the late [[1980s]] and early [[1990s]], '''gazumping''' became commonplace in [[England and Wales]] because a buyer's offer is not legally binding even after acceptance of the offer by the vendor. This is because, by s.2 of the [[Law of Property (Miscellaneous Provisions) Act 1989]] and in order to prevent [[dishonesty]], a contract for the sale of land must be in writing, a fundamental principle of [[English law]] that dates back to the [[Statute of Frauds]] of [[1677]]. |
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Revision as of 00:22, 5 March 2007
The verb "gazump" means to refuse to formalise a sale agreement at the last minute in order to accept a higher offer. The word is thought by some people to have come from the Yiddish word gazumph meaning to swindle or overcharge, which became gangster slang in the 1920s.
With buoyant property prices in the British residential property market of the late 1980s and early 1990s, gazumping became commonplace in England and Wales because a buyer's offer is not legally binding even after acceptance of the offer by the vendor. This is because, by s.2 of the Law of Property (Miscellaneous Provisions) Act 1989 and in order to prevent dishonesty, a contract for the sale of land must be in writing, a fundamental principle of English law that dates back to the Statute of Frauds of 1677.
When the owner accepts the offer on a property, the buyer will usually not yet have commissioned a building survey nor will the buyer have yet had the opportunity to perform recommended legal checks. The offer to purchase is made "subject to contract" and thus, until written contracts are exchanged either party can pull out at any time. It can take as long as 10-12 weeks for formalities to be completed, and if the seller is tempted by a higher offer during this period it leaves the buyer disappointed and out-of-pocket.
When property prices are in decline the practice of gazumping becomes rare. The term gazundering has been coined for the opposite practice whereby the buyer waits until everybody is poised to exchange contracts before lowering the offer on the property, threatening the collapse of a whole chain of house sales waiting for the deal to go through.
Scots law and practice makes the problem of gazumping a rarity in Scotland. In the Scottish system of conveyancing buyers get their survey done before making a bid to the seller's solicitor. Sellers normally set a closing date for written offers, then provide written acceptance of the chosen bid. The agreement becomes binding when a seller's solicitor delivers a signed written acceptance of a buyer's offer. Should the seller attempt to accept a higher bid before the contracts have been legally finalised by a written offer and acceptance, their solicitor will refuse to act for them as this would be professional misconduct. As in England, all contracts for the sale of land must be evidenced in writing signed by or on behalf of each party. In Scotland the parties' solicitors sign on their behalf, unlike in England, where buyer and seller both sign a contract which has been produced in duplicate form, with the duplicates then being exchanged to effect a binding contract. It is often wrongly claimed that gazumping is a rarity in Scotland because it is said that an oral agreement on a property deal is legally binding; while the law on contract differs from the law in England, the rarity is due to the different system of conveyancing.
In Scotland, gazundering is possible where the buyer has insufficient assets to be worth suing, but is not common.
The term gazump can also be used to refer to the practice when someone else comes in late in the evening and picks up the girl you have been working on all night.