Legal Definitions - gazumping

Gazumping refers to a practice, predominantly found in real estate transactions, where a seller accepts an offer from a buyer but then either demands a higher price or accepts a superior offer from a different buyer before the sale is legally finalized. This typically occurs after an initial agreement has been reached but before the exchange of contracts, leaving the original buyer in a vulnerable position, often having already incurred costs related to the purchase.

• Example 1: Seller Demands a Higher Price

  After weeks of searching, David and Emily found a house they loved and had their offer of £400,000 formally accepted by the seller, Mrs. Peterson. They proceeded to arrange a mortgage valuation and instructed their solicitor to begin the conveyancing process. However, just before the contracts were due to be exchanged, Mrs. Peterson informed them that she had received a higher valuation for the property and would now only sell it for £420,000, effectively increasing the price after their initial offer was accepted.

  This scenario demonstrates gazumping because Mrs. Peterson, the seller, unilaterally raised the agreed-upon purchase price after having already accepted David and Emily's offer, placing them in a position where they had to pay more or lose the property.

• Example 2: Seller Accepts a New, Higher Offer

  A small business owner, Mr. Chen, made an offer on a commercial unit, which the current owner, Mr. Davies, verbally accepted. Mr. Chen then invested time and money into obtaining planning permission for his proposed changes to the unit and began discussions with his bank for a business loan. Before the legal paperwork was completed, Mr. Davies received a significantly higher offer from another interested party. Despite his prior agreement with Mr. Chen, Mr. Davies decided to accept the new, more lucrative offer, informing Mr. Chen that the unit was no longer available to him.

  This is an instance of gazumping because Mr. Davies, the seller, withdrew his acceptance of Mr. Chen's offer in favor of a new, more financially advantageous offer from a different buyer, after Mr. Chen had already committed resources based on their initial understanding.