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

rhionm

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!

anselld

Unlikely I would think otherwise they would never buy a property unless it was chain-free.

Was there ever any expectation from them that it was a chain-free purchase? If not they are just trying it on, and your solicitor should just explain that it is not possible for the reasons you have mentioned.

rhionm

I wouldn't have thought that they expected it to be chain free, think I might try and push the solicitor to get the HA to pay a deposit or were taking all the risk!

G_M

Just say no.

rhionm

But if we say No and they pull from the sale due to this (there shouldn't be any other reason for pulling out) we have then potentially lost the house that we have found?

anselld

rhionm wrote: »

But if we say No and they pull from the sale due to this (there shouldn't be any other reason for pulling out) we have then potentially lost the house that we have found?

Exactly what they want you to think, but it is completely abnormal not to pay a deposit. Say no.

moneyistooshorttomention

I've only bought a house once, ie the one I currently have.

I will be interested to watch this thread, as I am now looking to sell current one and buy another one instead.

I know I was told by my solicitor at the time that I must provide a 10% deposit at one point (think it must have been at exchange?) and I was not expecting it and it was totally out of the blue and only JUST manageable (circumstances of my buying this house were so unusual that I wasn't paying anything like that as a deposit "in actual fact").

As I have now paid off the mortgage on my current house and will be using "current house" to fund "next house" then I will be in the position again of not actually having deposit money to hand and will need to hand over the whole of the money for "next house" at completion. Thus, I'm getting a bit concerned as to whether I will be expected to "take money out of my current house" before I actually HAVE that money there "in my hands". But I quite definitely CAN afford "next house" and there will be no problem at all in providing all the money for that on completion (because MY buyer will have handed over the full cost of this house to me that day on completion on their purchase).

To me it looks as if the only way the vast majority of people possibly could hand over 10% (at least for those "moving up or down the ladder") would be if "Exchange of Contracts" on ALL properties in the "chain" occurred on the same day. Thus A would give B the money to hand over deposit to C to hand over the deposit to D. I understand that chains all have to have Completion on the same day, but I very much doubt that the logistics of a situation would allow for them all ALSO having "Exchange of Contracts" on the same day as well.

So I shall be interested to find out what the "standard practice" is for this. I have the impression that it's the norm for ALL money to come over at completion and it's only the very rare seller indeed that expects any of the money at "exchange of contracts" time.

anselld

moneyistooshorttomention wrote: »

I've only bought a house once, ie the one I currently have.

I will be interested to watch this thread, as I am now looking to sell current one and buy another one instead.

I know I was told by my solicitor at the time that I must provide a 10% deposit at one point (think it must have been at exchange?) and I was not expecting it and it was totally out of the blue and only JUST manageable (circumstances of my buying this house were so unusual that I wasn't paying anything like that as a deposit "in actual fact").

As I have now paid off the mortgage on my current house and will be using "current house" to fund "next house" then I will be in the position again of not actually having deposit money to hand and will need to hand over the whole of the money for "next house" at completion. Thus, I'm getting a bit concerned as to whether I will be expected to "take money out of my current house" before I actually HAVE that money there "in my hands". But I quite definitely CAN afford "next house" and there will be no problem at all in providing all the money for that on completion (because MY buyer will have handed over the full cost of this house to me that day on completion on their purchase).

So I shall be interested to find out what the "standard practice" is for this. I have the impression that it's the norm for ALL money to come over at completion and it's only the very rare seller indeed that expects any of the money at "exchange of contracts" time.

In a chain purchase you only need to fund the difference between your purchase deposit and your sale deposit. The timing is handled by solicitors.

Cara79

moneyistooshorttomention wrote: »

I've only bought a house once, ie the one I currently have.

I will be interested to watch this thread, as I am now looking to sell current one and buy another one instead.

I know I was told by my solicitor at the time that I must provide a 10% deposit at one point (think it must have been at exchange?) and I was not expecting it and it was totally out of the blue and only JUST manageable (circumstances of my buying this house were so unusual that I wasn't paying anything like that as a deposit "in actual fact").

As I have now paid off the mortgage on my current house and will be using "current house" to fund "next house" then I will be in the position again of not actually having deposit money to hand and will need to hand over the whole of the money for "next house" at completion. Thus, I'm getting a bit concerned as to whether I will be expected to "take money out of my current house" before I actually HAVE that money there "in my hands". But I quite definitely CAN afford "next house" and there will be no problem at all in providing all the money for that on completion (because MY buyer will have handed over the full cost of this house to me that day on completion on their purchase).

So I shall be interested to find out what the "standard practice" is for this. I have the impression that it's the norm for ALL money to come over at completion and it's only the very rare seller indeed that expects any of the money at "exchange of contracts" time.

My understanding is that basically there will be a FTb or cash buyer at the bottom of your chain. They will pay, say a 10% deposit of their purchase price & then this gets passed up to u as a seller, then ur sol passes it onto your vendor until this gets to the top of the chain.

I hope I've explained that well enough.

At least that is what has happened when selling & buying the few properties I have done in the past.
X

moneyistooshorttomention

anselld wrote: »

In a chain purchase you only need to fund the difference between your purchase deposit and your sale deposit. The timing is handled by solicitors.

'Scuse the fuzzy thinking. I've not had a second cup of coffee and woken up properly yet. So - the likely 10% deposit on "current house" that a buyer would need is probably £17,000. The likely 10% deposit on "my next house" is probably £16,000. Thus - if my "morning fuzzyheadedness" is thinking straight then that would mean I guess that my purchaser might have to concern themselves, but I wouldnt (ie because the house I'm buying wouldn't be a dearer one). My possible £16,000 would be less than my buyers' possible £17,000?

Is that correct? Is my brain awake enough yet that I have that right?

PaulLuke

moneyistooshorttomention wrote: »

'Scuse the fuzzy thinking. I've not had a second cup of coffee and woken up properly yet. So - the likely 10% deposit on "current house" that a buyer would need is probably £17,000. The likely 10% deposit on "my next house" is probably £16,000. Thus - if my "morning fuzzyheadedness" is thinking straight then that would mean I guess that my purchaser might have to concern themselves, but I wouldnt (ie because the house I'm buying wouldn't be a dearer one). My possible £16,000 would be less than my buyers' possible £17,000?

Is that correct? Is my brain awake enough yet that I have that right?

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.