Interest on Deposit Between Exchange and Completion

Lobby12

We're FTB's just about to exchange on our first house and are wondering who gets the interest on the deposit between exchange and completion. We will have approx 4 weeks between exchange and completion. I have read conflicting information but think the desposit will get handed to the seller's solicitors on exchange so they will accrue the interest. Are they legally obliged to pass the interest to the seller on completion? As a buyer would we get any of the interest?

Also, due to the sellers solicitor being totally incompetant (i.e. not sending the seller a contract to sign until ours tried to exchange - yes we know we should have asked them to check this before handing over the deposit but as FTB's we assumed the solicitors knew the process better than us) our solicitor will hold our deposit for a few days before exchange - are we entitled to the interest on the money during this time?

Thanks

jjlandlord

It should be written in the contract.

That said, as an example, let's see how much that would be with a 50k deposit:

0.5% annually on 50k: £250, which is a whopping 68p a day.
Over 4 week that's be a grand total of £19.

nidO

Lobby12 wrote: »

Are they legally obliged to pass the interest to the seller on completion?

Not necessarily. It's a case of paying interest when deemed "fair and reasonable" to do so, the seller's terms of business from their solicitor should outline under what circumstances interest is paid but this will usually have a minimum floor of £10-£30, if interest accrued is less than this theyll get nothing.

Lobby12 wrote: »

As a buyer would we get any of the interest?

No, it's no longer your money and it's not being held by your solicitor.

Lobby12 wrote: »

our solicitor will hold our deposit for a few days before exchange - are we entitled to the interest on the money during this time?

As above. While your solicitor is holding the money for you (ie before it's been paid on exchange) it is still your money, any interest due on this should be outlined in your terms of business from your solicitor but it's unlikely to be a high enough amount to reach the minimum floor they may well stipulate as a few days' interest on even a large deposit is likely to be a few £ at the very most.

Lobby12

Thanks for the information. We knew it wouldn't be a lot of interest as we have seen it whilst we were saving the money. That said it is a sizable amount of money and we certainly weren't letting it linger in accounts paying just 0.5% interest!

I'll check on the contract thresholds - we're buying direct from a family member so any interest paid would go to them so we're happy with that anyway .

TrickyDicky101

If the solicitor's account doesn't pay any interest (which is entirely possible) there won't be any interest anyway.

Dan-Dan

jimmyy_2006 wrote: »

I advice you to get professional advice from mortgage lender

Why would that be?

kingstreet

jimmyy_2006 wrote: »

Housing and mortgages can become very complicated, especially when your selling. I advice you to get professional advice from mortgage lender

Many lenders don't give advice.

Branches will have to do so from 26 April, but at the moment it's "here's three quotes, pick one" in most cases.

Saying which, what would a lender be able to say about solicitor client accounts and interest?

AdrianC

Lobby12 wrote: »

Thanks for the information. We knew it wouldn't be a lot of interest as we have seen it whilst we were saving the money. That said it is a sizable amount of money and we certainly weren't letting it linger in accounts paying just 0.5% interest!

It's a sizable amount of money to you. It is very likely not that sizable amount to the solicitor, who will be seeing sums many, many, many times that amount on a day-to-day basis through the client account. A business account with instant access is very unlikely to pay anything like the interest rate of a personal account, especially if that personal account has access restrictions on it.

Seriously, ignore this red herring, and focus more on whether you're getting good service and value for money from the solicitor.

Yorkie1

I very much doubt that a solicitor's client account for money which is held for such a short period of time and at instant access pays any more than 0.1% interest.

Solicitors must account for interest on a fair and reasonable basis. They are also allowed by the rules not to pay any interest where it comes to less than a small amount e.g. £20.

https://sra.org.uk/solicitors/handbook/accountsrules/part5/content.page

I don't think that anyone will be paid any interest on the deposit for OP's house.