Exchange of Contract Deposit

morwok

HI All,

This is the first time selling and buying at the same time and wanted to check I have this understood correctly.

On exchange we give to the solicitor 10% of the purchase price.

We are in a chain so say we are buying for 400 we pay 40k. If we are selling for 300k the buyer has 30k so we can use this and need to pay an additional 10k.

Now what happens if for some reason something goes wrong down the chain (and it is not our fault) presumably we still forfeit essentially 10k so the only one this benefits is the top of the chain.

Thanks just trying to get my head round this.

andrewjb3

Everyone sues everyone else up and down the chain, depending on who failed to complete. It theoretically all ends up with the one that broke the chain down owing LOTS of cash.

e.g. if your buyer doesn't complete, your seller keeps the 40k, and sues you for other expenses. You pass that on by suing you buyer for your sellers claim + your own claim..

morwok

andrewjb3 wrote: »

Everyone sues everyone else up and down the chain, depending on who failed to complete. It theoretically all ends up with the one that broke the chain down owing LOTS of cash.

e.g. if your buyer doesn't complete, your seller keeps the 40k, and sues you for other expenses. You pass that on by suing you buyer for your sellers claim + your own claim..

Thanks that make more sense then so in theory it should be fine once you have exchanged. We have trust issues with our buyer (see previous thread!)

HouseBuyer77

Problems occur when your buyer cannot cover the costs you are suing them for (and others are suing you for).

If you're near the bottom of the chain then it's quite likely this would happen.

However failure to complete after exchange leading to complete breakdown of the chain and everyone suing everyone for 10s of thousands is extremely rare. I doubt you worry about being run down by a car when you cross the road, so no use worrying about this.

pinkteapot

Failure to complete after contracts have been exchanged is exceptionally, exceptionally rare. Most conveyancing solicitors have gone through their whole career without ever encountering a case. You'll see the odd post about it on here because it's an exceptional thing so people need advice.

Even if you've got a a loony buyer, their solicitor will be having some pretty sharp words with them if they randomly decide they're not completing after legally committing to it.

Of all the stresses around completion when you're in the middle of the chain, failure to complete is the least of your worries.

kingstreet

morwok wrote: »

If we are selling for 300k the buyer has 30k so we can use this and need to pay an additional 10k

This is not usually the case.

Your buyer's deposit is usually sufficient without you having to come up with £10k in cash to make 10%.

Speak to your solicitor about this.

morwok

kingstreet wrote: »

This is not usually the case.

Your buyer's deposit is usually sufficient without you having to come up with £10k in cash to make 10%.

Speak to your solicitor about this.

Thanks all I have asked the solicitor if we can have a reduced amount but the comments all put my mind a ease. This is definitely stressful we are never moving again lol