What does 'Broken Chain' mean when buying a property?

Find out what Broken Chain means when you are buying a property. 'What does Broken Chain mean?' plus over 150 other property related terms and jargon in plain English

Broken Chain

If you're buying a property these are probably the last two words you want to hear.

A chain (sometimes called a "Property Chain") means a set of property transactions that are all interlinked. None of the transactions can actually happen without all the others happening as well.

Simple Broken Chain Example

Let's say you are buying a flat from Ms A who is upsizing and buying a house from Mr B. Mr B. is moving abroad for work and so will be moving into a rented apartment.

Ms A won't finalize the sale of her flat to you until Mr B finalizes the sale of his house to her.

The two properties are the chain - you are at the bottom of the chain, Mr B is at the top. This is a fairly simple chain of 2 properties, the longest one I have seen involved 11 transactions!

You, Ms A and Mr B are all capable of "breaking the chain" by changing your minds and deciding not to buy or sell.

Let's say Ms A finds out that she will probably be demoted at work and will be getting a pay cut. She's not sure she can now afford Mr B's house so she decides not to move. In property lingo we say she "pulled out" of the purchase of Mr B's house and "pulled out" of the sale to you.

A bit more lingo - we say both transactions have "fallen through".

Extended Broken Chain Example

Let's take the same example above but Mr B isn't moving into rented accommodation, he's buying from Mr C who is selling an empty property he owns. So Mr C is now the top of the chain.

When Ms A "pulls out" she has "broken the chain" but parts of the chain still exist. Ms A is out of the picture but Mr B still wants to buy from Mr C.

As an agent we would want to "repair the chain" as soon as possible by finding Mr B a new buyer.

Let's say we do find Mr B a new buyer, Ms F who is selling her property to Ms E who is selling her property to a first time buyer.

So now we have a repaired chain containing 3 properties. You might want to get a pen and paper to sketch that out! Its exactly what I do when chains are complex.

Managing Property Chains

A good estate agent will manage chains the best they can by "Deal Chasing" all the transactions even if some or most of them are not taking place via their agency. "Chasing" simply means calling all the parties involved to identify possible delays (such as a solicitor not returning calls, local searches being delayed, etc.) and finding ways to resolve them because ... Time Costs Deals.

If you want to know how best to handle situations when you end up in a property chain pick up a copy of my ebook How to Really Buy a Property.