Paying full deposit before contract exchange?

dancelikeamonkey

Hi, I have my mortgage offer in place and now am going through all the paperwork for exchanging contracts.

It's been a long time since I've bought a house, and I'm sure that back in the day I paid a small deposit (10% of the property value or so) to the conveyancer prior to contract exchange and the rest nearer the completion date. However, I got a letter this morning which states that they want the full deposit prior to exchange (which will be nigh on £50k).

I have the money, but as we aren't expecting to complete for two month due to the seller moving to a house currently being built, it seems like a lot of money for it not to be sitting in my own bank account for that amount of time. How do I know that it'll be safe and the conveyancers won't go bust and leave me out of pocket.

Is this normal and it's my own fault for having such a long gap between exchange and completion?

(I know I could ring them, but they aren't open until Monday and I could do with some advice before then).

Thanks in advance :wave:

MiniSis

My deposit is currently sitting in my solicitors bank account as our exchange is delayed slightly. But they did only request 10% of the property price and not my full deposit.

go_cat

They will want it before exchange as that is what they have to pass to the other solicitor upon exchange

They will put it into a holding account for this.

We also had to pay all our fees before exchange so once exchanged we didn't owe anything

GDB2222

The deposit on exchange is normally 10%. Why not ask your solicitor why he wants more?

G_M

'Deposit' has two (confusing) meanings.

In conveyancing terms, you, the buyer, must pay a deposit (usually 10%) to the seller at Exchange. Your solicitor needs this in advance to ensure he can pay it for you on Exchange.

In 'common parlance' in house buying, people also refer to the 'deposit' they are paying as the personal cash they are putting towards the purchase, as opposed to any mortgage they are getting. This may be any amount from about 10% (these days) to 90%!

Your solicitor needs this amount from you in advance of Completion. However, where Exchange and Completion are close together (ie a week or so apart) he may ask for it before Exchange to avoid any delay/mishap.

Has he actually asked for £50K, or has he asked for 'the full deposit' (ie the 10% needed on Exchange)?

dancelikeamonkey

Thanks all - they have asked for the full amount to be paid to them before exchange which is just over 30% of the property value.

Seems that it's not a black and white answer so I'll speak to the conveyancer on Monday.

Richard_Webster

I can't see why they need any more than 10%.

I usually ask the clients for the 10% and tell them as accurately as I can the total amount that I will need in due course. If completion is near they sometimes decide to give me all the money in one go.

dancelikeamonkey

Yeah, I'm hoping that it's just that they've forgotten that there is such a long period between exchange and completion. Wouldn't care if it was just a week or two, but that's almost £90 in interest I would miss out on over two weeks - as well as the fears of the money going walkabout.

G_M

dancelikeamonkey wrote: »

Thanks all - they have asked for the full amount to be paid to them before exchange which is just over 30% of the property value.

Seems that it's not a black and white answer so I'll speak to the conveyancer on Monday.

You are making an assumption.

If they have asked "for the full amount" of the deposit. they may still be referring to the full 10% deposit due at Exchange.

But if not, then yes, there is no reason not to remind them of the long Exchange/completion period and explain you'll pay the balance later (but still in good time for Completion).

Either way, a phone call/email to the solicitors with clarify.

dancelikeamonkey

Just for closure - I spoke to my solicitor and yes, they wanted the full amount because they expected exchange and completion to be with a week or so of each other. When I explained that it was going to be at least another 2 months before completion they said they were happy to just take the "usual" 10% deposit.

So alls well that ends well. Thanks for the advice everyone.