Buyer doesn't want to pay deposit on exchange-risky?

maninthestreet

you have to ask - why don't they want to pay a deposit at exchange - is it because they don't have the funds available?

mel48rose

maninthestreet wrote: »

you have to ask - why don't they want to pay a deposot exchange - is it because they don't have the funds available?

I'd be a bit wary here!

rhionm

No they have the funds! There buying around 30 properties between now and April 2013 (new Government initiative) and wan't to put this clause in the contract on all of them.

eddddy

rhionm wrote: »

Hi
We have sold our house to a large Housing Association, and we have an offer accepted on a new property.

Our solicitor has received a letter stating that the Housing Association would prefer not to pay a deposit on exchange just pay the whole amount on completion. Our problem is that we will have to pay a deposit on the new property on exchange.

It is very unlikely that the HA will pull out of the sale but is there any other risk that we should be aware of (they have bought around 60 properties and not pulled out of any yet).

Solicitor is out of office until tomorrow so wan't to will speak to them just want an idea of risk as it will be going round my head all night!!

Thanks people!

Is the housing association a charity? Perhaps they are hoping that you will agree to this as a charitable gesture. If the money stays in their account between exchange and completion, they will earn interest on it. If it is lodged as a deposit, I don't believe they would receive the interest. (Or conversely, if the charity is relying on borrowings, delaying the payment reduces the interest they pay.)

I guess it's down to how much you trust the HA, and whether you need their deposit to fund your purchase deposit.

My guess is that they would pay the deposit, if you asked them to.

moneyistooshorttomention

Personally - even though it seems that it's "standard practice" to hand over 10% deposit on exchange - I would trust a Housing Association to "come up with the goods" and keep right on with selling my house in O.P.'s position.

My take on this is that they just have their own "standard practice" of hanging on in there to ALL their money until the last moment to maximise the interest on it. Hence I wouldn't worry myself in that position and would just go ahead. They wouldn't want to be "blown out of the water" with bad publicity for no follow through in their position. Whereas I can see that some "private homebuyers" might not give a darn about anything like that. So it's a bit of a different scenario here.

giraffe69

I think the HA are being preposterous and your solicitor should have told them where to get off. Occasionally 5% instead of 10% is accepted. I can't really see them withdrawing for this reason. They are just trying it on.

R_P_W

moneyistooshortomention - exchanging a 10% deposit is standard practice for a reason. I wouldn't trust anyone whether they are a housing association, chairty or a private buyer.

I would be very concerned as why they can't pay 10%. If they exchange then they are required to proceed and complete - if they dont then you can sue them. But you dont want to get to that so I would insist on the 10% at exchange.

Managed to write a whole post without putting any words in "quotes".

ash28

PaulLuke wrote: »

Yup in your case that is correct. As an aside 'normal' practice is most certainly to pay a 10% deposit on exchange and it would be unusual not to pay the deposit at exchange. the deposit kind of acts as a guarantee of completion as, without the deposit, if the buyer failed to complete, the seller would be left in the position of having to sue them for any form of compensation whereas if they are already holding the 10% deposit, they have at least got that money to hand.

We have bought and sold around 8 houses and the only time a deposit was physically required was as first time buyers.

We last bought and sold in October last year and we gave no money as a deposit to the solicitor and we did have the money to be able to pay one - the first time buyer at the bottom of the chain paid a deposit which was then passed up the chain.

In theory each buyer should make up the deposit coming in on their sale up to 10% before passing it over on their purchase. And a seller is perfectly entitled to ask for this - but I imagine many chains would collapse as a lot of people have their money tied up in the property and not sitting in the bank.

maninthestreet

Why can't the HA abide by the generally accepted property-purchase practice of paying a deposit at contract exchange? If they pull-out after exchange (with no deposit paid), you will have to pusue them through the courts for recompense. If you have their deposit, they lose that if they pull out of the sale. Perhaps you can make a counter-offer of a 5% deposit at exchange, rather than 10%?

SleeplessinScandinavia

rhionm wrote: »

No they have the funds! There buying around 30 properties between now and April 2013 (new Government initiative) and wan't to put this clause in the contract on all of them.

Thanks for posting!

I'm sure there'll be folks out there that will be 'wary' about such a buyer.

Must admit, my recollection of dealing with solicitors/conveyancers (as a buyer) is that they generally always ask you whether you are able to pay the 10% deposit on exchange of contracts...

If they are not able to/don't wish to, then it could be a major factor in deciding whether to accept an offer

Hope it works out