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Buyer wants deposit back after he pulled out!
Poing
Posts: 54 Forumite
Quite a lot of detail around the problem needed first, sorry, here goes! We had to move last November, due to me changing jobs, and put the house up for sale in October. We had an offer in April and the buyer put down £1000 with the estate agents as a deposit. We asked for clarification of what the deposit meant and the estate agents told us that the only way that the buyer would get his money back, would be if for example he pulled out due to a bad survey – implying we would get the deposit if it fell through for any reason not caused by us. We decided to take the offer, which was £7.5k less than advertised, based on the £1000 deposit and also that the buyer was well known to the estate agents, having bought several houses from them in the past, and they also assured us we would get a quick completion aiming for ~6-8 weeks.
So we filled in our side of the paperwork for our solicitor, but then heard nothing back. When we asked when the survey was going to be done, we found out ~5 weeks after the offer was accepted, that the buyer could not get a mortgage (buy-to-let). We were then asked if we would agree to sell the house to him for £5k more than he would pay so that he would have more of a deposit against the mortgage. Yes it sounds dodgy, but everyone assured us it was legal, even that the banks were suggesting it, and as he would still be getting the house for less than it was advertised, all above board in a technical way, especially as he would never physically have the £5k – it would only exist on paper.
Anyway, we agreed, after we were assured it was all above board. However, 10 days later, they came back to us that he still could not get a mortgage and that the only way he could buy was if we dropped the price by another £7.5k! So we told him we weren’t prepared to drop the price that much – now £15k under the asking price (relatively a large percent £95k instead of £110k) and had to put the house back up for sale (end of May).
So the sale fell through, but then he demanded his deposit back from the estate agents. When we spoke to our estate agents to find out what was going to happen, we found out that they never had a written contract between themselves and him about the terms of the deposit. We also have no formal statement about the terms of the deposit. So we were left waiting whilst the estate agents investigated it from their side. In the meantime we received a letter forwarded from our estate agents that they received from the buyer’s solicitor asking what grounds they were holding the money, and to provide a copy of any documents showing any contract that is claimed to exist. So we finally got proof that the money has actually existed and changed hands, but nothing else.
One of the estate agent owners finally got back to me and said that they definitely do not have any documentation, and cannot get anyone to verify what they told us about the terms of the deposit. He then told me that he will have to fight the buyer in court, and if it comes to it, pay us the deposit himself.
We didn’t hear anything else, and decided not to rock the boat as we were now trying to sell the house again, and it had now been empty for over 6 months. We finally got another buyer at the end of July and have just completed. I have now spoken to the estate agents again to find out what is happening. One of the owners gave me a load of rubbish saying, he thought it was in the original buyer’s, their’s and our’s solicitors’ hand’s – but I was told in the past there was nothing we could do from our side. He also claimed to know nothing of the agreement that they would give us the deposit, even if they had to pay it themselves and that it didn’t matter now as we’ve sold it anyway – even though we’ve now taken even less because of the whole delay caused by this (sold for £98k, but more than the first buyer could supposedly pay – very suspicious!).
Then I finally spoke to the other owner who had promised we would get the deposit back, and he is offering to give us £500 off their fee and not the full £1000. The original £1000 is still in their hands, and they are waiting for a court day, as the original buyer is still trying to claim it back. I also found out that this has happened to them in the past and they lost the case in court, and that they are no longer taking any cash deposits as it’s not worth the hassle for them. If it has happened before you would expect them not to make the same mistake again!
We have not paid the estate agents their fee for the sale of the house yet and the money is with our solicitor. I am now considering refusing to pay £1000 of the estate agents fee, as the mistake is entirely their fault. I presume this will end in two ways – they will either take us to court, or will decide it is not worth the hassle. So sorry, for the huge amount of detail, but I’d like any advice that people can offer about what would happen if they took us to court and we lost, e.g will it affect our credit rating/file, and what sort of costs could be involved (we would represent ourselves). I’d also like this to be a warning to prevent the same thing happening to anyone else.
We are really angry about the whole thing, and that unless we risk being taken to court, the estate agents will get away with their complete mismanagement and failure to look after their customers (us!),so do we call their bluff or not? Or say we will take £1000 off their fee, and pay them £500 if they lose the court case and have to return the deposit – I wouldn’t trust them to tell us if they actually won, and then they would pocket the £500 themselves!
Many, many thanks.
So we filled in our side of the paperwork for our solicitor, but then heard nothing back. When we asked when the survey was going to be done, we found out ~5 weeks after the offer was accepted, that the buyer could not get a mortgage (buy-to-let). We were then asked if we would agree to sell the house to him for £5k more than he would pay so that he would have more of a deposit against the mortgage. Yes it sounds dodgy, but everyone assured us it was legal, even that the banks were suggesting it, and as he would still be getting the house for less than it was advertised, all above board in a technical way, especially as he would never physically have the £5k – it would only exist on paper.
Anyway, we agreed, after we were assured it was all above board. However, 10 days later, they came back to us that he still could not get a mortgage and that the only way he could buy was if we dropped the price by another £7.5k! So we told him we weren’t prepared to drop the price that much – now £15k under the asking price (relatively a large percent £95k instead of £110k) and had to put the house back up for sale (end of May).
So the sale fell through, but then he demanded his deposit back from the estate agents. When we spoke to our estate agents to find out what was going to happen, we found out that they never had a written contract between themselves and him about the terms of the deposit. We also have no formal statement about the terms of the deposit. So we were left waiting whilst the estate agents investigated it from their side. In the meantime we received a letter forwarded from our estate agents that they received from the buyer’s solicitor asking what grounds they were holding the money, and to provide a copy of any documents showing any contract that is claimed to exist. So we finally got proof that the money has actually existed and changed hands, but nothing else.
One of the estate agent owners finally got back to me and said that they definitely do not have any documentation, and cannot get anyone to verify what they told us about the terms of the deposit. He then told me that he will have to fight the buyer in court, and if it comes to it, pay us the deposit himself.
We didn’t hear anything else, and decided not to rock the boat as we were now trying to sell the house again, and it had now been empty for over 6 months. We finally got another buyer at the end of July and have just completed. I have now spoken to the estate agents again to find out what is happening. One of the owners gave me a load of rubbish saying, he thought it was in the original buyer’s, their’s and our’s solicitors’ hand’s – but I was told in the past there was nothing we could do from our side. He also claimed to know nothing of the agreement that they would give us the deposit, even if they had to pay it themselves and that it didn’t matter now as we’ve sold it anyway – even though we’ve now taken even less because of the whole delay caused by this (sold for £98k, but more than the first buyer could supposedly pay – very suspicious!).
Then I finally spoke to the other owner who had promised we would get the deposit back, and he is offering to give us £500 off their fee and not the full £1000. The original £1000 is still in their hands, and they are waiting for a court day, as the original buyer is still trying to claim it back. I also found out that this has happened to them in the past and they lost the case in court, and that they are no longer taking any cash deposits as it’s not worth the hassle for them. If it has happened before you would expect them not to make the same mistake again!
We have not paid the estate agents their fee for the sale of the house yet and the money is with our solicitor. I am now considering refusing to pay £1000 of the estate agents fee, as the mistake is entirely their fault. I presume this will end in two ways – they will either take us to court, or will decide it is not worth the hassle. So sorry, for the huge amount of detail, but I’d like any advice that people can offer about what would happen if they took us to court and we lost, e.g will it affect our credit rating/file, and what sort of costs could be involved (we would represent ourselves). I’d also like this to be a warning to prevent the same thing happening to anyone else.
We are really angry about the whole thing, and that unless we risk being taken to court, the estate agents will get away with their complete mismanagement and failure to look after their customers (us!),so do we call their bluff or not? Or say we will take £1000 off their fee, and pay them £500 if they lose the court case and have to return the deposit – I wouldn’t trust them to tell us if they actually won, and then they would pocket the £500 themselves!
Many, many thanks.
0
Comments
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Please give a one paragraph description of who paid whom what.
From what I've read, you don't want to pay back the original buyer a £1K deposit.
However, you sold the house in the end, so I assume that you had to pay EA fees for that.Happy chappy0 -
Id not pay them. Have you got anywhere in writing that the Agents agreed to pay you the £1k after the buyer backed out?
You have lost 6 months potential rental on the house which would surely be more than £1k.
If push comes to shove contact the Estate Agents Association (or whatever).
Re the court - if you are doing it yourself it will cost the court fee (about £40 I think) and the day you lose going to court - if you do indeed go to court. Meanwhile they lose the cost of their bloke being out of the office for a day at a very bad time for agents, getting a local newspaper write up (hopefully
) about the dubious way they did business and probably a solicitors fees.
Basically, you have the upper hand, sit tight.
PS and did a Bank really tell you it wasnt fraudulent to inflate the price to cover the other blokes deposit ???0 -
The agent doesn't have any rights in law to hold such a deposit, it's just a scam many of them try on. The buyer is entitled to it's full refund and (imho) was naive to pay it.
You signed an agreement with the agent for a fee. They are entitled to that fee, you can't make anything conditional after the event.
The agent is giving you the runaround, there was never going to be any "contract" for a deposit like this. I'd accept the £500 discount if I were you. You don't have any case for chasing the old prospect for £1,000 unless you had a binding contract with them.Signature on holiday for two weeks0 -
Mutton_Geoff wrote: »The agent doesn't have any rights in law to hold such a deposit, it's just a scam many of them try on. The buyer is entitled to it's full refund and (imho) was naive to pay it.
You signed an agreement with the agent for a fee. They are entitled to that fee, you can't make anything conditional after the event.
The agent is giving you the runaround, there was never going to be any "contract" for a deposit like this. I'd accept the £500 discount if I were you. You don't have any case for chasing the old prospect for £1,000 unless you had a binding contract with them.
I agree, chances are the EA will lose the case and have to return the deposit, and end up £500 out of pocket.
Take the £500 and call it a bonus.Bankruptcy isn't the worst that can happen to you. The worst that can happen is your forced to live the rest of your life in abject poverty trying to repay the debts.0 -
Let the EA make the first move. Then work out yours. Im not clear on the EA's position- you say they are offering you £500 NOW? Is that in writing?
Good luck0 -
Poing
Is the Ea a member of the NAEA?A retired senior partner, in own agency, with 40 years experience in property sales & new build. In latter part of career specialising in commercial - mostly business sales.0 -
People keep suggesting these pre-contract "deposits", but this perhaps is a salutary lesson about why they are not a good idea. Evidently agent thought he knew what he was doing with taking the deposit, but he didn't. Really they are a distraction from the main business of getting a sale or purchase to go through.
They are either completely returnable, as appears the case in fact here, or if they try to draw up terms the buyer's solicitor will be keen to try to prevent his client losing out and the time wasted on that argument will distract from getting on with looking at the title, searches, raising enquiries etc. In the present market why should any buyer agree to pay such a deposit?RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
I paid a holding deposit of £1K for a flat I wanted to buy back in early 2007, that needed some work doing to it, and where other buyers were interested. I put the money up front to prove I was serious about buying it and wouldn't offer lower price at the last minute, and the intention was that if I pulled out (bar serious defects in survey) then I would loose the money.
Luckily for me, my solicitor cleverly worded the letter regarding the deposit and both parties agreed it would be held by my solicitors. In the end the vendor became quite unreasonable and I pulled out... AND I got my 1K back because my solicitor had the foresight to cover every eventuality in his letter.
In hindsight, I would never pay a holding deposit, and especially not in this climate!0 -
I think the key issue here is the EA. Who's he going to want to keep sweet? You, who are moving away and therefore unlikely to ever give him any more business? Or a buyer who's bought loads of properties through him and is likely to buy many more?
I've said for a long time that what's in the best interests of an EA is not necessarily what's in the best interests of their "client".0 -
Can someone please clarify, because I can't face reading the first post again.
OP thinks that they are owed £1K from a deposit that a buyer put down, but then the buyer pulled out?Happy chappy0
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