When English Property Transactions Are In Trouble: Breaches, Completion Notices And Risk Traps

Parties enter into sale and purchase agreements with a shared objective: completion of the deal. But the period between exchange and completion can be volatile. Financing can fall away, markets can move sharply and commercial priorities can change.

When one party looks unlikely to complete, or has already failed to do so, the innocent party usually needs answers quickly. Should it hold the line and push for completion? Cut its losses and terminate? Keep the deposit? Claim damages? And just as importantly, has it done everything necessary to preserve those options?

Two common scenarios show why the answer is rarely mechanical.

Anticipated breach: when the buyer signals it cannot complete

Imagine the seller has exchanged on the sale of a portfolio of industrial units, with completion due in 10 working days. Time is not of the essence. Since exchange, market values have risen and the agreed price now looks attractive to the buyer and disappointing to the seller.

The buyer then admits it will not be able to complete because financing has fallen through.

At that stage, the contractual completion date has not yet passed, so the seller must not serve a notice to complete as it will be invalid and could undermine their position. But that does not mean it has to sit still. It can: 

1. remind the buyer of the completion date, reserve its rights and make clear the consequences of non-completion; and/or 
2. as soon as the completion date arrives, serve a notice to make time of the essence.

Once the completion date has passed, the seller may be able to serve a notice to complete giving the buyer a final deadline, often 10 working days. If the buyer still does not complete, the seller may have the right to terminate. It could also be entitled to retain the deposit, claim sums already incurred and pursue damages, depending on the terms of the contract and the facts.

The key point is that remedies should be chosen to match the seller’s objective. If the market has moved in the seller’s favour, termination may be commercially attractive. But if the seller wants to preserve the deal, its strategy may look very different.

The hidden danger: a notice to complete can backfire

Now take a different scenario. 

A seller has agreed to sell an office block in a prime location. The buyer has paid only a 5% deposit. Time is of the essence. Completion requires deliverables from both sides, including remediation works to be completed by the seller.

The buyer becomes unresponsive, and the seller, reluctant to incur further cost without confidence the deal will complete, leaves the remediation works unfinished. The completion date passes and frustrated by the buyer’s silence, the seller serves a notice to complete giving 10 working days to complete, and requires it to top up the deposit to 10%.

The problem? The seller was not ready, willing and able to complete when the notice was served due to the unfinished remediation works.

That matters because a notice to complete is only effective if the serving party is itself in a position to perform. If it is not, the notice may be invalid. Worse still, serving it can expose the seller to the allegation that it has itself committed a repudiatory breach. If so, the buyer may then seek to terminate and claim damages, despite having failed to complete in the first place. Further, because the notice to complete is not effective and likely invalid, the buyer is also not required to top up the deposit.

This is where strategy matters just as much as black-letter law. A notice to complete can be a powerful tool, and can make available to the seller additional remedies such as requiring the buyer to top up a deposit, but only when used from a position of readiness. Used too quickly or without checking the seller’s own deliverables, it can become an expensive own goal.

Start with the objective, then test your position

These scenarios illustrate the same broader point: before reaching for a remedy, the innocent party should first decide what it wants to achieve. Is the priority to:

• force completion? 
• exit the deal? 
• preserve leverage for a renegotiation? 
• recover losses? 

The answer will shape the next steps. Just as importantly, the innocent party should test its own position before acting:

• Is it itself ready to complete? 
• Has it done anything to affirm the contract? 
• Are there preconditions to serving a notice? 
• Is there a guarantor or deposit structure that changes the strategy?

Those questions are critical because the sequencing of remedies can materially affect the outcome. 

Our client guide, Quick Guide to Remedies for Breach of an SPA, provides a practical summary of the main tools available, including making time of the essence, notices to complete, guarantors, and deposits, together with the advantages, disadvantages and strategic considerations for each. It is designed to help buyers and sellers assess the available remedies quickly and choose the route that best supports their commercial objective.