Deposit at exchange

[Cogcog]

The saga of my new build continues.

The builders are offering a completion in early November although the house is complete except for snagging. I think this delay is because they want to push the loan they are taking out on my part ex into their next financial year which starts 31/10. We were due to exchange today but the sticking point is that they want a 10% deposit on exchange and have refused to reduce it.

My concern is that looking at their company accounts they owe a eight figure sum to the bank due for payment in this financial year (by 31/10). If they go tits up with my money I will be waiting months/years for the administartors to work out the money, which has happened once already on this site.

.I have told the developers that this has the potenmtial to be a deal breaker and that they should either bring forward completion or accept a smaller deposit and I have suggested their solicitor hold the deposit in a way the developer cannot get at it . I don't think they were impressed that I was suggesting they might go tits up or that I had seen their 2009/10 accounts.

What is my risk on handing over over a full deposit (the obvious one is detailed above) and how can I minimise the risks or work around this?

[B17NNS]

As you've mentioned, I'd request the deposit be kept in the solicitor's client account on the basis that it is transferred to the developer on completion.

[Roo]

I've only ever bought two houses but on both occassions the deposit was more of a promisory note to pay if we pulled out. I never actually parted with any money.

Is that not the norm then?

[anonymous-user]

When I puchased the developers wanted £12k up front. I told them to FO, we still completed.
ETA, is this a national large builder?

Edited by Dave_ST220 on Monday 12th September 16:55

[Cogcog]

They tell me that it is their standard T&C but that, and I quote;

"From when you exchange contracts your deposit is covered by the NHBC warranty."

I am checking that out as I type.

NHBC:

"I have just paid a deposit for a new build home. What would happen if the builder goes out of business before I move in?"
If your builder becomes insolvent then we can repay the amount you have already paid to them under contract and which you cannot recover, up to a limit of 10% of the original purchase price or £100,000, whichever is less. Or if the property has been started, we may instead pay the additional cost up to this limit to complete the home in accordance with NHBC requirements.

http://www.nhbc.co.uk/Homeowners/Protectinghomeown...

Edited by Cogcog on Monday 12th September 20:18

[H6CJF]

Cogcog said:

They tell me that it is their standard T&C but that, and I quote;

"From when you exchange contracts your deposit is covered by the NHBC warranty."

I am checking that out as I type.

NHBC:

"I have just paid a deposit for a new build home. What would happen if the builder goes out of business before I move in?"
If your builder becomes insolvent then we can repay the amount you have already paid to them under contract and which you cannot recover, up to a limit of 10% of the original purchase price or £100,000, whichever is less. Or if the property has been started, we may instead pay the additional cost up to this limit to complete the home in accordance with NHBC requirements.

http://www.nhbc.co.uk/Homeowners/Protectinghomeown...

Edited by Cogcog on Monday 12th September 20:18

So, if I'm reading that correctly, you're covered then?

[Rude-boy]

anonymous said:

[redacted]

This.
Call your solicitor and tell them that you will not agree to the other side holding the deposit as Agent but that it must be held as stakeholder.

[anonymous-user]

anonymous said:

[redacted]

Not to mention NHBC standard probably means a roof on it.

[Cogcog]

The cover letter from my solicitor says that our deposit is at risk (genric letter I think) but then goes on to say NHBC covers it. I think the risk is hers now?