Has anyone here used a pre-contract deposit agreement?

lb364

I was just reading about gazumping/gazundering and wondered if anyone had used one of these?

"A pre-contract deposit agreement involves both parties paying a deposit - usually about £1,000 - which is held by the agent. Should either side pull out without good reason the other keeps the full amount by way of compensation." (http://www.findaproperty.com/displaystory.aspx?edid=00&salerent=0&storyid=3120)

Seems like a good idea but how do you get one in place? And does it just complicate things?

Alisha2008

In Spain no one would buy/sell a house without one of those, when I was told they didn't exist in the UK I was astonished!!! I find the process of buying/selling really stressing because this contract does not exist.. it makes everything much more easier and fair, both for the buyer and the seller.

G_M

Who would define " without good reason"?

lb364

Alisha2008 wrote: »

they didn't exist in the UK I was astonished!!!

Really? Oh now I'm disappointed. Seems like a good idea, although G_M has a point but I guess it would have to be something substantial like something major showing up on the survey?

I just hate the idea of losing thousands in fees because of a greedy seller

Alisha2008

I had the same fear when I bought my first property in the UK last year.. luckily the sellers were good honest people and everything went smoothly.. but I have a friend that agreed to buy a flat and then the sellers decided to put up the price! And she had to pay or lose time and money spent on solicitors, estate agents, etc. So unfair...

When I said the contracts do not exist I meant they are not common, but I'm sure you can draw one if you want, privately.

G_M, all the reasons to pull off are specified on the contract. If the buyer pulls off, they lose the deposit, if the seller pulls off (or decide they want more money), they have to pay double the deposit to the buyer, this is a standard contract.

Richard_Webster

The reason we don't have these pre-contract contracts is that solicitors would have to charge a whole lot more and waste a lot of time arguing over the wording.

There are all kinds of reasons why a buyer might pull out when he discovers something coming out of his solicitors checks and searches or from a survey. How do you define what is reasonable and what isn't?

G_M

Alisha2008 wrote: »

G_M, all the reasons to pull off are specified on the contract. If the buyer pulls off, they lose the deposit, if the seller pulls off (or decide they want more money), they have to pay double the deposit to the buyer, this is a standard contract.

I'd be fascinated to see the list. Sounds like open market day for lawyers.

Searches shows no Building Regs certificate for boiler? OK to pull out?
Survey indicates 'Roof is near the end of it's life and may eed replacing within 5 years'. OK to pull out? If not, how do re-negotiate price? Or can't you?
Seller's onward purchase falls through (due to one of the 'reasons' in that contract) - can he use that to pull out of his sale.

It's a legal minefield. That's why property purchases here only become binding when both sides are 100% ready and contracts are exchanged.

sonastin

lb364 wrote: »

I guess it would have to be something substantial like something major showing up on the survey?

OK, now define "something substantial"...

What about things that are blatantly obviously wrong to all but a blind man, but the buyer was too naive/ignorant/stupid to realise until his surveyor told him? e.g. the house where you just have to look up to see sky - can the buyer pull out because he never looked up during a viewing and the survey report says that the property is in urgent need of a new roof? After all, he's paying the surveyor to tell him whether the house is in a fit condition to buy. That might be more clear cut but what about an asbestos sheet garage? To me it is obviously contains asbestos but I know some people wouldn't recognise it and would panic at the use of the "a" word on the survey. I don't see it as a major deal but the buyer might.

It is impossible to split hairs on every possible issue that might crop up on every single property purchase so as has already been pointed out, you'll spend twice as much on solicitors and surveyors fees getting this agreement drawn up, before you even get started on the sale agreement.

amistry

I found these people that do just that...
assuredsale.com

arbrighton

amistry wrote: »

I found these people that do just that...
*****.com

this looks suspiciously like spam. Popping up a thread that's been quiet for month to mention a website. Not many posts to your name

theGrinch

sounds like several weeks will be wasted working on such a contract