The Greene & Co Goodwill Charter
Gazumping and Gazundering
Under the Estate Agency Act in England and Wales, estate agents are legally bound to pass on all offers received to the seller and it is up to the seller whether or not they consider them. Gazumping happens when a seller who has already accepted one buyer's offer then goes on to accept a higher offer, pushing the first buyer out of the picture. The seller can legally decide to accept the new offer, regardless of how close the initial buyer is to having the contracts exchanged, as until the papers are signed there is no legal obligation to either buy or sell.
Gazundering is a phenomenon more common to a buyers market. This is where the buyer waits until everybody is poised to exchange contracts and then lowers his or her offer on the property. If the seller refuses, the whole chain may collapse.
The Greene & Co Goodwill Charter
Unique to Greene & Co, the Goodwill Charter is a legal document, devised along with solicitors, (Nicholas Green, Ingram Winter Green, 26-28 Bedford Row, London WC1R 4HE) to help avoid gazumping and gazundering. The goodwill charter helps to stop vendors and purchasers from entering into sales they have no intention of honouring. If either party withdraws from the sale without a genuine reason, within the agreed time period (normally fourteen or twenty one days from the date the vendors solicitors provide a complete package of information), they forfeit the bond they have paid.
We think that this type of agreement will eventually become compulsory when buying a property as it seems to be the only way to prevent gazumping or gazundering. The agreement can be made subject to a purchasers mortgage offer, survey etc, but if either party breaks the agreement for no good reason the money that the agent has been holding will be directly paid to the other party. If both parties keep to the agreement for the agreed time period regardless whether an exchange of contracts has occurred the money will be returned immediately.
Greene & Co Goodwill Charter Questions and Answers
Q: If I pull out of the sale, what happens to my bond?
A: You lose it, unless there is a genuine reason for you to withdraw, such as, a bad search or your solicitor finding a major defect in the lease.
Q: How much money do I have to lay out?
A: The amount is agreed between the vendor and the purchaser, we suggest £500 - £1000 each.
Q: For how long is the agreement binding?
A: This should be discussed by both sides but we would suggest 14 - 21 days.
Q: If I pull out of the sale and therefore lose my bond, does the agent keep the money?
A: No, we pass it on to the purchaser/vendor to cover their abortive costs.
Q: Is signing the charter legally binding?
A: We believe so. As with any legal document, you should take advice before signing it.
Q: I am happy to sign the charter but would like to make amendments/additions to it. Can I do that?
A: Yes, it can be amended to both parties specific needs as long as you both agree.
Q: At the end of the time period do I get my money back if I haven’t pulled out?
A: Yes.
Q: What happens to the other party’s share of the bond?
A: If they have kept to the agreement, their money is returned to them. If they have broken the agreement, you will receive their bond.
Q: Is there is anything comparable within the industry?
A: Apparently so... But "The Goodwill Charter" is unique to Greene & Co.
Q: What government plans are to help reduce gazumping and gazundering?
A: They want to enforce sellers to have a "sellers pack" ready with selling details, recent valuation and structural survey, lease and all managing agent details for property. Basically, they want the vendor to show how serious they are about selling by paying out money before even marketing the property.