Help! Could we lose £27,000?

SpanglyBex

Have just found out that our buyers have NO deposit to put down on exchange... not a sausage! We knew they were 100% mortgage but (perhaps naively) assumed they would have at least a small sum saved to put down as security...

Both sides are ready to exchange & they've offered a proposed completion date of 11th May, which is great, except that our solicitor is now urging us to consider a simultaneous exchange & completion, presumably on that date. We would rather exchange now to have at least the security of the contract in place should they drop out before completion, but my question is how useful is the contract at protecting us when there's no money on the tabel as security?!?!

My BIG worry is that we'll need to put down a £27k deposit on what we're buying, and obviously if anything goes wrong on our sale we stand to lose that with absolutely nothing to compensate us from our buyers!

I'm sure I'm being dramatic but has anyone ever had their buyers drop out between exchange & completion? I'm sure we can't be the only people whose buyers have no deposit! Also, if anyone knows how much the contract will protect us I'd love to know! I'm sure our solicitor is doing the right thing in saying the contract gives us legal recourse in the event of a breach but given we will hold no money from them it will be very difficult to obtain any after - but clearly there's a difference between theory & practice here!

Any advice from anyone who has been in this position before or has knowledge or experience on this would be very much appreciated!

silvercar

Most contracts proceed smoothly. If the buyers have gone to the expense of getting a mortgage, survey and legal work you can be sure they intend to buy.

Two options are to exchange and complete on the same day or to exchange with zero deposit. If there was a problem you would have to use the legal process to obtain redress ie sue them.

It is annoying, as we all assume that they should be able to get a small deposit from somewhere (what are they going to buy furniture with?), but if they say they have no money there is little you can do.

Pass the buck up the chain and tell your sellers you can only give a 5% deposit as you are not receiving anything to pass on.

CLAPTON

when buying and selling, just before contract exchange my solicitor contacted me to say my buyer was asking to pay only 5% deposit rather than 10% deposit and suggested i agree.

i asked my solicitor to give me her best advice on the matter and could she write to me to confirm. she wrote recommending the deposit should be 10%.

lynzpower

if the buyer pulls out between exc-completion and they dont have a 10% deposit to put down, you can still sue them for the amount that 10% is.

10% is the rule of thumb tho

pooranddesperate

There are pros and cons to both options:

- exchange with no deposit, and only pay a limited amount in deposit to the people you are buying off: if your buyer were to pull out you would still be entitled to recover the 10% deposit that they should have paid on exchange -but, and this is a big but you potentially would have to sue them for this - and will have the hassle and expense of taking them to court - and if they really don't have any money you might never recover anything (and you will still be liable for your 10% deposit to the people up the chain)

Realistically though very few people drop out between exchange and completion. I would ask for some kind of deposit, even if it is only small, a couple of thousand say (as previous poster said how are they gonna buy furniture etc.) to show willing on their part

- exchange and compeltion on the same day. This adds to the stress of the whole thing, but is doable (although the people you are buying off would also have to agree to you doing this). You will have to sort out moving vans, arrange for mortgage money to be paid to your solicitor etc.. for the particular date, and there is still the potential for any party to pull out of the transaction prior to that date.

Guess its down to which you think is the lesser of the 2 evils..

prudryden

Don't believe them. They probably have the money somewhere.

snowmaid

SpanglyBex wrote: »

Have just found out that our buyers have NO deposit to put down on exchange... not a sausage! We knew they were 100% mortgage but (perhaps naively) assumed they would have at least a small sum saved to put down as security...

Both sides are ready to exchange & they've offered a proposed completion date of 11th May, which is great, except that our solicitor is now urging us to consider a simultaneous exchange & completion, presumably on that date. We would rather exchange now to have at least the security of the contract in place should they drop out before completion, but my question is how useful is the contract at protecting us when there's no money on the tabel as security?!?!

My BIG worry is that we'll need to put down a £27k deposit on what we're buying, and obviously if anything goes wrong on our sale we stand to lose that with absolutely nothing to compensate us from our buyers!

I'm sure I'm being dramatic but has anyone ever had their buyers drop out between exchange & completion? I'm sure we can't be the only people whose buyers have no deposit! Also, if anyone knows how much the contract will protect us I'd love to know! I'm sure our solicitor is doing the right thing in saying the contract gives us legal recourse in the event of a breach but given we will hold no money from them it will be very difficult to obtain any after - but clearly there's a difference between theory & practice here!

Any advice from anyone who has been in this position before or has knowledge or experience on this would be very much appreciated!

Forgive my ignorance (FTB! ) but aren't deposits there to secure the loan from the point of view of the lender, rather than the seller? I thought it was the mortgage companies who preferred deposits and that is why so few of them give 100% loans?

papermoney

Is it because they are getting a 100% mortgage?
I wouldn't assume they did have the money.

We have sold our house and although slightly different to your situation, we are buying another and have NO deposit. We are going for a 100% mortgage although it's split up as 95% mortgage and a 5% loan )at the same rate as the mortgage and over the same term).

Maybe they have something along the same lines?

silvercar

we had a similar problem, the second family in our chain claimed to have no money for a deposit. We told them that they would have to find something, in the end they used their stamp duty money for a deposit as this doesn't actually have to be paid until 28 days after completion. We ended up with them paying 3% deposit, someone else at 4% and us at 5%. At least everyone was paying a deposit and it meant we could have 10 days between exchange and completion.

machofairy

Are the sellers of your new house prepared delay the exchange a bit? If so, I think the safest will be to do that AFTER you have completed selling your existing house. Even if you have a day or a week gap in between the two completions, you do not risk losing any deposits if the selling of your current house falls through. Stay with family or hotel, store items in commercial storage in the meantime. Any costs will be miniscule compared to the potential loss of deposit.

lesley1960

I dont think its unusual these days for buyers not to have any money for a deposit , my daughter moved to a new build last friday her buyers didnt have a deposit , the builders of the new build were being awkward (?! ) about it , so exchange and completion took place on the day of the move , not ideal but in our business we see it happening a lot