house buying/selling...deposits

[fido]

when purchasing & selling a house (in a chain) - does the amount (%) of deposit between each party matter? my purchaser has asked to pay a reduced amount of 5%, and i'm wondering what the issues are with this, my main worry being if for some reason, completion falls through - i'm left with a shortfall because my vendor has asked for a 10% deposit (on a more expensive property i should add). i never did understand the exact mechanics of conveyancing...

can wait till Monday to speak to my (very busy) solicitor, but if any legal types on here could shed some light. you're not all down the pub surely?

regards Mikey.


>> Edited by fido on Friday 25th November 22:59

[mr bee]

Nothing to worry about. Purchaser won't recieve mortgage funds until just before completion. So deposit has to paid out of own funds. This is normal especially for first time buyers on a tight budget.

[littlegreenfairy]

We didn't put a deposit down as such - we just did something with the solicitor which basically *put the money by* because the woman who we were buying from was messing us about SO much.

[mxdi]

Ours is happening this week, delayed a little because the solicitor wanted ALL moneys paid before exchange, was thinking its the first time I ever had to do that, always paid deposit on completion date and got a solicitors bill after, IIRC

Having said that we are the start of the chain, so they need our money for the rest of the deposits dont they.

>> Edited by mxdi on Saturday 26th November 10:17

[SJobson]

Standard contract terms state that even if you don't pay a 10% deposit, if you fail to complete on the contractual completion date you must make it up to 10% and then if you fail to comply with notice to complete, the vendor keeps the full 10%.

There's no reason to accept 5% from your purchaser unless you want to, but it's quite usual to do so these days. However, I'd pass that on to the vendor of the house you're buying, unless you're happy to fund the extra yourself. Maybe agree to pay 10% yourself but that you'll keep the interest on it, perhaps?

[Piglet]

The danger is that if your purchaser fails to complete with you, you can't complete on your purchase (unless you've got the ££ in the bank?), so you'll default on your purchase and you're purchaser will pocket the 10% that you've paid him. If your purchaser has only paid you 5% of presumably a smaller amount than you're purchasing for this leaves you with a large gap to the amount you've lost.

Yes, legally your purchaser is obliged to make up the difference from 5% to 10% as he is still due to pay 10% you've just agreed to only collect 5% - in practical terms though are you planning to sue him for the difference? You're already down to the tune of your deposit on your purchase because of him are you going to throw more money after it?

In practice it happens on many many sales and doesn't go wrong but it's wise to be aware of the risks.