Buyer reducing deposit right at exchange!

MrsMoosie

Hi all

My husband and I are right at the last hurdles for selling our home. We've been chasing for exchange on our sale for a while, and today we heard from our solicitors that our first-time buyers called to exchange. However, they can only offer a 5% deposit instead of the usual 10% deposit. :mad:

Our solicitors have said that should the buyers fail to complete, we would be entitled to 10% of the purchase price, but if we accept the lower deposit we may have to potentially take legal action to enforce the contract and recover the full 10% (which would equate to £32,000).

My questions are:

1. Should my solicitors and the buyers' solicitors not have ascertained the deposit available prior to all of this?
2. What are the repercussions of accepting the lower deposit?
3. Would the buyers still be contractually obligated to pay the full purchase price at completion (including the 5% deposit they didn't pay at exchange)?

I am concerned that a fast one is being pulled by the buyers and to be honest, I'm really angry that they don't appear to have been financially vetted up to this point.

Any advice/guidance greatly appreciated.

Carmen.

Hoploz

Try to calm down. It's a very stressful time. They have not done anything hugely unusual, it's just poor planning.

As a FTB they were probably not aware of the fact that they needed to come up with the full amount at this point. Could it be that they are only putting down 5% in cash, the rest is from mortgage/help to buy/some other source. I remember being in this exact position as a FTB many years ago. I had to ask the seller to accept a reduced deposit as I simply did not realise a whole 10% would be needed at exchange. In more recent transactions I have had to chase my solicitors to give me exact figures for exchange and completion, they just do not seem to prioritise telling you the amounts needed and when.

Your buyer will most likely have no intention of not going through after exchange, it is very unusual for anything to go wrong in between. You would still be entitled to the full amount if it did.

They have not asked for a price reduction.

MrsMoosie

Thank you Hoploz. Sorry, it's been an incredibly stressful house sale process that has gone on for 9 months, so we are anxious just to get moving.

They had a 95% mortgage with a lender, and they were getting a 5% deposit (we knew this bit upfront) but then we were asked to delay exchange and completion by a month as they were getting additional funds from a family member. We had always understood tacitly that a 10% deposit would be paid at exchange, however, our solicitors have really not been a big help at all in this process so I can fully see that they would have omitted to explain to the buyers what deposit was required.

As long as we can still go ahead at the full purchase price at completion, then you're saying that really, the size of the deposit now is not that material, given that we need to exchange contracts, with balance of the funds paid at completion?

Thanks so much
Carmen.

Hoploz

Yes it should still all be fine.

The only tripping point could be if you have an onward purchase which also requires a 10% deposit and their shortfall leaves you short also.

princeofpounds

Should my solicitors and the buyers' solicitors not have ascertained the deposit available prior to all of this?

Your solicitor would have proceeded along standard terms. Your buyer's solicitors should have informed the buyers about this requirement, but they may have done so and poor organisation by the buyer might be the reason, you just don't know.

What are the repercussions of accepting the lower deposit?

If the exchange falls through then you have slightly less immediate compensation. To be honest though, 5% is still fine even though it's not bulletproof, as long as house prices don't crash in the interim.

If you have an ongoing purchase, you will need to be paying your own contractual deposit and would need to come up with more funds yourself.

Would the buyers still be contractually obligated to pay the full purchase price at completion (including the 5% deposit they didn't pay at exchange)?

Yes. The fact they can't raise it right now might indicate they are a slightly riskier proposition to complete, but normally this just happens because people get their cashflows wrong (i.e. assuming a cheque would clear early, or that shares would be delivered in time).

If you find out the specific reason/excuse then that might help guide you but I wouldn't consider the sale dead by any means.

Glover1862

it's still £16k and potentially more if they fail to complete, don't think that's pocket change, i would just exchange.

MrsMoosie

We do have an onward purchase, but the exchange on that is slightly later as the timescales are out. We are looking to exchange on that a day or two after completion on our sale.

It's very annoying and frustrating, but I guess as long as we can complete and get the full funds on completion day we are ok.

Thanks again.

MrsMoosie

Thank you everyone, for helping to calm down an already-stressed woman who is in desperate need of a large glass of wine right now!

Marktheshark

Might be an idea to keep it on the market until they actually cough something up.

Rollinghills

Don't want to stress you out more but you do realise that not exchanging at the same time is risky? If something goes wrong / there is a delay with your purchase you will have to find somewhere else to stay until it's all sorted?

ethank

I have never paid more than 5% on exchange. I've always had an agreement that if I pull out I lose the 10%. I have never pulled out of sale. Try to focus on the positives rather than what could happen!