Gazumping is the practice of a seller raising the price of a property after an agreement has been reached with a buyer but before the sale is finalized. This last-minute change is typically aimed at securing a higher sale price. Gazumping is generally viewed as an unethical practice, as it undermines the trust and commitment established during the negotiation process.
Gazumping is primarily relevant in real estate transactions. It often arises in residential property sales where a buyer and seller have verbally agreed on a price, but the seller later decides to accept a higher offer from another buyer. This situation can lead to disputes and may involve legal action if the buyer feels misled. Users can manage some aspects of property transactions through legal templates available from US Legal Forms, which can help ensure agreements are documented properly.
Here are a couple of examples of abatement:
Example 1: A buyer agrees to purchase a home for $300,000. Just days before signing the purchase agreement, the seller receives a higher offer of $320,000 and decides to accept that instead, leaving the original buyer without a home.
(Hypothetical example)
| State | Gazumping Regulations |
|---|---|
| California | Gazumping is not legally enforceable if a formal contract has not been signed. |
| New York | Similar to California, a signed contract is necessary to prevent gazumping. |
| Texas | Gazumping can occur, but buyers may have recourse if they can prove reliance on the initial agreement. |
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
| Term | Definition |
|---|---|
| Gazumping | Raising the price of a property after an agreement has been reached. |
| Gazundering | Lowering the price of a property just before the sale is finalized. |
| Binding Agreement | A legally enforceable contract that prevents either party from changing terms without consent. |
If you find yourself in a situation involving gazumping, consider the following steps:
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No, gazumping is not illegal, but it is considered unethical.