Deposit with agreeing a price on a property?

[Igurisu]

I just wanted to ask opinions please. We've made an offer on a property (that has been rejected), but during the course of discussion the owner has said that he requires a deposit due to being messed around in the past. The deposit is roughly 2% of the asking price. The wife and I are not even sure we will reach agreement during the negotiation, but I was surprised at the request for a deposit.

I've not heard of this practice before, but then again I haven't bought a property for almost 30 years. Is this unusual or a regular occurence?

[BigTom85]

Its not uncommon for a cash deposit to be offered when making an offer, particularly in volatile markets. Its a bit unusual to demand one though.

[Jasandjules]

I suspect your lawyer will confirm that no such deposit can be binding on the sale of land until contracts have been exchanged.

[Muncher]

They're crackers.

[joefraser]

Igurisu said:

I just wanted to ask opinions please. We've made an offer on a property (that has been rejected), but during the course of discussion the owner has said that he requires a deposit due to being messed around in the past. The deposit is roughly 2% of the asking price. The wife and I are not even sure we will reach agreement during the negotiation, but I was surprised at the request for a deposit.

I've not heard of this practice before, but then again I haven't bought a property for almost 30 years. Is this unusual or a regular occurence?

It's not common practice but it's not unheard of.

If you 100% want it, and will 100% be accepted (if you are mortgaging) then go for it to secure it I guess.

If any of the above aren't true then consider it a risk, as it's not binding in the slightest.

[Bluebarge]

Find another house. You will need lawyers to draw up a deposit agreement before you have even done a survey - crazy idea.

[AC43]

Jasandjules said:

I suspect your lawyer will confirm that no such deposit can be binding on the sale of land until contracts have been exchanged.

This

[bmthnick1981]

AC43 said:

Jasandjules said:

I suspect your lawyer will confirm that no such deposit can be binding on the sale of land until contracts have been exchanged.

This

Correct. 10% on exchange is conventional and common place.

[JustinP1]

bmthnick1981 said:

AC43 said:

Jasandjules said:

I suspect your lawyer will confirm that no such deposit can be binding on the sale of land until contracts have been exchanged.

This

Correct. 10% on exchange is conventional and common place.

Yes.

This is what I did last time I bought. The upside is that you have a binding contract so no stress with gazumping etc or other shenanigans in the run up to moving in.

[Igurisu]

Thanks all for the replies. As much as we like it we haven't agreed on price but will take into account the advice.

Pete

[blueg33]

Deposit with a lock out agreement is reasonably common on land deals and could be applied to a house purpose.