What's the name of the 'bond' that secures the property you want to buy?

fimonkey

I heard that there's a scheme whereby the buyer AND seller can both put money into an account that guarantees they're both serious about the sale proceeding, and that if the sale falls through, the person whose fault it is looses their money.

1. What's the name of this scheme please?
2. Which account is the money held in (and who gets the interest)?
3. Who administers the account?
4. Is this for the buyer AND seller to do,\or can just the seller/or buyer put up the money?
5. What legal document should be drawn up? And should this be done through the EA or conveyancing solicitors, or someone completely independant?

Many thanks all!

Doozergirl

I'm not aware of any such scheme. If there is one, then I would not pay into it! If I were selling a development, I woudn't mind paying in as I need to sell the house and so I couldn't lose, but I would never put myself in such a situation if I were buying, nor if I were selling my home. You can't guess what going to happen in the months between offer acceptance and exchange of contracts.

If you are a buyer and you want a house, the conveyancing process of surveys, searches etc. is to ensure that the house you like the look of is a sound investment for you. If there are problems with the house that you weren't expecting, then you must be able to pull out.

Likewise, what if the vendors of the house you were buying found problems with the house they were buying and couldn't find anywhere else? Or if circumstances changed dramatically?

For you to draw up such a contract it would have to be pretty watertight and you would have to detail the circumstances under which it would be acceptable to withdraw from the sale. I don't think it would work.

You could ask a purchaser to put down some sort of deposit to show willing, held by the EA perhaps, but this really should be returnable if things go wrong.

fimonkey

Hmmm. there IS such a contract that exists, I've heard of it before, and I just want to know what it's called and what it actually covers.

Anyone know?

Cheers

thesaint

fimonkey wrote: »

Hmmm. there IS such a contract that exists, I've heard of it before, and I just want to know what it's called and what it actually covers.

Anyone know?

Cheers

I'm with doozergirl on this one. In Brazil they have this scheme but i've never heard of it over here.

Why not phone a conveyancing solicitor if you are so sure?

terrierlady

just asking, so dont scream, are you getting this mixed up with an exchange bond?

rjm2k1

Maybe you are talking about contract exchange? Once contracts are exchanged, there are financial consequences for either party pulling out before completion. For the buyer it can be taken out of the deposit, for the seller, the buyer would probably have to take them to court to enforce the contract.

Doozergirl

terrierlady wrote: »

just asking, so dont scream, are you getting this mixed up with an exchange bond?

(Sound of a penny dropping in the Doozer household)

theGrinch

holding deposit?

in deals I have done it is usually 1% of the agreed price and in return you get an exclusivity period. usually only developers dabble in this though.

fimonkey

Aha.. lightbulb moment!! thanks all, I was confused between a holding deposit and an exchange bond. Now then, could someone please explain to me why a buyer would want to put down a holding deposit, and what the holding deposit is actually for? and what it does?

Also, same questiosn above but for the exchange bond please?

Thanks ALL!

SpampMan

A really good idea would be a form of escrow where both buyer and seller put a bond in an escrow account. If one of the parties changes their mind, they forfeit the bond. HMG should have set this up instead of the HIP.

nelly_2

What's the name of the 'bond' that secures the property you want to buy?


Is it this one?