This article discusses guidelines that a solicitor would have to follow when two or more buyers are introduced to the sale.
It is quite possible that a seller before presenting the contract can introduce more than one prospective buyer. When such a situation happens, the buyers are said to be in a ‘contract race’ and the winner is one who can present the deposit cheque along with the signed contract.
When a solicitor acting on behalf of the seller is informed of the seller’s decision to involve more than one buyer, the solicitor should inform his client of his obligations under the Code of Conduct. Under the Code of Conduct, the solicitor is required to immediately inform the decision of the seller to the prospective buyers, (or to the solicitors acting on their behalf) along with the terms of the terms and conditions of the race, and the things required to be done to secure the property.
Buyers usually do not enter into a contract race as time and money is wasted when the property is not secure. It is the duty of the solicitor to warn his client (the seller) that he may lose all prospective buyers if a race is commenced.
If the seller does not allow his solicitor to inform prospective buyers of his decision to involve more than one prospective buyer, the solicitor should decline to act in the case without disclosing the facts to the buyers or their solicitors.
Needless to say, the solicitor should not act on behalf of the seller and the buyer because of an obvious conflict of interest. The solicitor acting on behalf of a buyer should also not represent more than a single buyer because of a conflict of interest.
Withdrawal of Papers:
Sometimes it may happen that the seller may have supplied a draft contract, but has subsequently received another offer and would like to pursue it. In such a situation, he can withdraw the first offer and the draft contract, before submitting them to the second prospective buyer. Thus, at any point in time, only one person will have the draft contract, and hence there is no contract race.
Photo courtesy: archer10 (Dennis)
