Help!! Friends sellers decide to pull out

wriggly

The "hefty deposit" may mean the up-front payment to the solicitors, that they like to get before starting work. When I had a buyer pull out, I'd paid a small sum in advance to the solicitor. Their final bill was higher than the deposit, but they waived the remainder - I guess they see that charging extra at such a time is not worth the loss of goodwill - an unusual trait these days!

andygb

Thanks for the replies folks, I was hoping that my wife would give me an update at lunchtime, but the young lady was not in work today (I hope she is alright, because it must be a shock).
I agree with Goldbyron, that the "English" system is at fault, and the laws are well overdue for a complete overhaul. It would be better if they resembled the French system, where either side can lose money if they pull out even at an early stage.

GDB2222

Doozergirl wrote: »

It costs £28 to send a CHAPS transfer from my bank. The 10% deposit on most house purchases wouldn't accrue that much in interest over 3 days if you just sent it via BACS

I earn 0.1% pa interest on the money in my instant access account. That seems to be the going rate at the moment for this sort of account. So, a typical deposit of say £20k would earn a princely 15p in interest over the 3 days - less tax.

Unless the deposit is over £3 million, it would pay me to send the money by BACS and forgo the interest. Mind you, if I were buying a house for £30m I'd probably seek professional advice.

Doozergirl

GDB2222 wrote: »

I earn 0.1% pa interest on the money in my instant access account. That seems to be the going rate at the moment for this sort of account. So, a typical deposit of say £20k would earn a princely 15p in interest over the 3 days - less tax.

Unless the deposit is over £3 million, it would pay me to send the money by BACS and forgo the interest. Mind you, if I were buying a house for £30m I'd probably seek professional advice.

Thanks for clarifying :rotfl: Late completion on our sale resulted in a cheque for £221 but that was at 10% interest over 4 days. Not a lot of people paying that these days - I would have been perfectly happy to wait a couple more weeks

rsykes2000

Milliewilly wrote: »

I have always paid the deposit by same day transfer i.e day of exchange - just curious as to why the person paid persumably in advance of exchange? I know their money is safe but I would keep the money in my bank not the solicitors!

The conveyancer I use several years ago asked for the money to be presented via Bankers Draft, which I did a couple of days before the completion due date as that was the only time I had available. Might be something similar, especially as with interest rates now, a couple of days lost interest is negligible...

andygb

A quick update, and it seems that some of the information given is incorrect. Even though the whole process, starting with a formal offer and acceptance started in mid September, no money has been paid for searches or a survey (which is very strange IMO). A 15% deposit has been paid into her solicitor's clients a/c, but I do not know if contracts have been exchanged (very strange). The reason for the sellers pulling out is quite simple though - they are in a chain, and the house which they were after is no longer available, so they have decided to stay put for the moment.
Meanwhile, the young lady is looking at £800 solicitors fees, which IMO seems to be very steep for a failed purchase, which has not even gone to the exchange stage.
With regard to CHAPs payments, having worked on this side of things for fifteen years, they are normal for 99% of solicitors/conveyancers, because they are same day, and a failed completion not only results in interest, but also compensation payments.

lfc321

This info all sounds a bit garbled to me. I can see why you'd pay the deposit into the solicitor's client account a couple of days before exchange, but not before a survey had even been done.

Exchange cannot have happened if there's been no survey/valuation (at least it couldn't if there is a mortgage involved) and I can't see that any solicitor would exchange without having done searches.

The £800 solicitor's bill would suggest to me that the searches etc have in fact been done. They will have to be paid for even if the purchase has now fallen through.

My guess is:
1. Survey has been done (but maybe your friend didn't pay - maybe the lender paid for it?)
2. Searches etc have all been done
3. Vendor has pulled out just before exchange.

If this is the case, as others have said, there is nothing that can be done. The money is lost, unfortunately.

andygb

It may sound "garbled", but is in fact third hand, so I have presented the "facts" (maybe not wise to call them that in this case) as I have heard them.
I think it is a pretty disgraceful affair, that the buyer should lose out because the seller changes their mind (for whatever reason), and this is a much criticised part of the house buying process.
Call me cynical, but could it be simply to allow members of the legal profession to further line their pockets?

clearing_out_my_pockets

Not necessarily. I know that my conveyancer will not charge if the vendor pulls out (due to no fault of my own). May be worth your friend checking to see if their solicitor does this also.

GDB2222

andygb wrote: »

I think it is a pretty disgraceful affair, that the buyer should lose out because the seller changes their mind (for whatever reason), and this is a much criticised part of the house buying process.

I think that most people agree with you. Equally, the seller should not lose out because the buyer changes their mind.

Really, this could be solved by both parties agreeing at the outset to pay the other party's costs if they pull out before exchange. That would not require any changes to the legal system. The sort of issues that will arise are when a survey comes back with defects and there is some negotiation over price - who then is pulling out?