Advice from a conveyancing solicitor please!

econo_2

I would appreciate advice in regard placing a non refundable deposit insistence on prospective house buyers.

I heard sometime ago on a financial phone in show that it was possible to easily insist on say a non refundable 10k deposit from a person who makes an offer on your property to ensure you are not messed about. Could someone please tell me how this works and if it starts with the estate agent etc?

The chap hosting the phone in was a conveyancing expert and said he did it for all his clients and was not difficult.

In the current climate I think it wise (a friend just going through two 3 month sales cycles and both ended collapsing) but I am unsure how it can be realistically enforced?

Many thanks for any help.

chickmug

If an agent is involved and is a member of the NAEA they will be bound by The NAEA Code of Practise section 7c:

7. Clients’ Money

In England, Wales and Northern Ireland
a) You must not hold a deposit or any other money belonging to a client, unless you are covered
by adequate insurance.
b) All clients’ money must be held in a separate client bank or building society account or
accounts, as set out in the Estate Agents (Accounts) Regulations 1981. You must be able to
account immediately for all money you are holding on behalf of a client.
c) You must refund immediately any deposit paid before exchange of contracts, together with
any interest that may be due when you are asked, in writing, to do so. You should ask for a
receipt for all the deposits you refund.
d) You must not deduct any cost or charges from any client’s money you hold, unless your

client has given you written authority to do so.

Davesnave

Sounds like a legal minefield to me, and we all know who benefits from those!

Would your friend really want to put an extra obstacle in the way of a sale at a time like this? He/she might as well have 'No time wasters' added to the sales particulars too, like all those car adverts I see......and pass over.

charliee_3

no buyer is going to go for THAT!! non-refundable 10k deposit.. where is the protection for the buyer??whats to stop the seller messing the buyer about so they get to keep the money?
why has your mates house fallen through twice? is there something wrong with it that is coming up on surveys?? Is it overvalued so mortgage companies are not lending on it?

I would say generally once people have paid out for a survey and instructed a solicitor they do not pull out without a fairly good reason...

superfran_uk

OK consider the following:

I have just bought a house (completion in one week) through an equity loan scheme as a FTB. I was a serious buyer and have gone from offer to completion in a short space of time. I did not have, and never have had, 10k at my disposal. The vendor will still get their money.

People often have all their equity tied up in their house. They might be mortgage free, but they will not be able to get their hands on the equity until completion. Unless they also have 10k of savings in addition to their mortgage, by your system they are also screwed.

You would be left only with FTB with a large deposit, or buyers with an £10k hanging around. Both of whom would have to be 100% confident in the property - that it would be valued at a certain price, would not have any faults...NOBODY takes that risk. I don't know why you would want to minimize the number of people who could buy your property to what can only be a very few stupid and rich people in the country?

As you might have guessed I am not a conveyancing solicitor, just a confused FTB!

chickmug

But just to point out we have dealt with sales where the seller has insisted on this type of deposit and that it is paid direct to them. The highest was £10,000 some years ago on a £450,000 price tag but was a hotel. The deal went through.

We have dealt with lesser amounts, on a similar basis, where the buyer has pulled out - and guess what - they insist on return of their deposit. On each time the seller has asked their solicitor for advice and on each of those occassions they have known they would be in the wrong and have paid it back.

I used to say to my sellers if you want a sign of good faith ask for a cash deposit to be paid into your hand and with a letter saying they did not expect it repaid under any circumstances. That was a long time ago and I would not of even dared suggested that in more recent years in case we got into trouble from one regulation or another.