5% deposit - seller not aware?

Thrugelmir

parkrunner wrote: »

I clearly don't understand mortgages. I just assumed (yes I know) that the buyer in this case is paying 5% of the agreed price and the mortgage company the other 95% which makes up the full price. It would appear I'm wrong so how exactly does it work?

If a 10% deposit was paid across at exchange of contracts. Then any excess funds would be reimbursed at the time of completion.

Thrugelmir

Bumblebee2128 wrote: »

How could I think about that form the onset when I did not know? I have searched this forum and it has happened quiet a few times befor so it's no unheard of. I have no way of raising the other 5% so have no idea at this stage what I will do until speaking with my solicitor. Why would I make sure I am somewhere he cannot tell me what he thinks of me? What he thinks of me is irrelevant I have bent over backward so to make this work for him even through some rediculous requests!

You've exchanged contracts. That's all that matters. The vendors solicitors are holding the deposit paid subject to completion. Shortly the vendor will be receiving the net proceeds from the sale and the matter will be forgotten.

Bumblebee2128

Parkrunner I'm so glad you commented! Lol. I'm not crazy after all!
Thrugelmir thank you for explaining things clearly. I have learnt a lot from this I must say. I'm just hoping that he is willing to accept it. We have no intention whatsoever of pulling out and I think he knows that. My house is half packed, my new furniture is ordered and my children have chosen everything for their rooms so we are 110% committed. Not to mention handing over our life savings!

Thrugelmir

Buying / selling property is a stressful time for all concerned. Nerves do get fraught. We all vow never to move again. Yet we do.

Hope your move goes well.

p00hsticks

parkrunner wrote: »

I clearly don't understand mortgages. I just assumed (yes I know) that the buyer in this case is paying 5% of the agreed price and the mortgage company the other 95% which makes up the full price. It would appear I'm wrong so how exactly does it work?

It's nothing to do with the mortgage (if any) - this is where the OP is getting confused.

It is standard procedure when buying property that the buyer puts forward 10% of the purchase price on exchange of contracts. This is held by their solicitor and is there to provide some assurance to the seller that the buyer can complete the transaction (as they are now legally obliged to do after exchange of contracts).

On completion the deposit money is included in with the other money used to purchase the property.

Think of it a bit like the deposit a tenant puts down when arranging to move into rented accomodation.

If the buyer can't afford 10% deposit then they need to get their solicitor to negotiate with the sellers solicitor to see if the will accept less, or exchange and complete on the same day, which negates the need for a deposit.

eddddy

I strongly suspect that it's simply the case that contracts were exchanged specifying a 5% deposit.

But the seller didn't realise because they failed to read something properly - or perhaps even the seller's solicitor agreed to a 5% deposit without properly consulting the seller.

I think that explanation is far more likely than a solicitor exchanging contracts without funds in place for the deposit - that would be grade A* negligence (or stupidity).

So that would mean neither buyer or seller have anything to worry about - unless the buyer fails to complete.

mrschaucer

I know in this instance there is no upward chain, but imagine there were. Mr A at the bottom can only afford a 5% deposit at exchange. Mr B, next one up, is expected to cough up a 10% deposit to give to Mr C, who also has to find 10% for Mr D at the top. Mr B was originally expecting 10% of his sale price to come from Mr A and knew he then had to find a few thousand extra to meet Mr C's contract, which he could just do. What he might find impossible to do is effectively pay Mr A's "missing" 5% as well. That's why the whole chain needs to agree on 5% deposits for everyone involved, and why solicitors need to talk to each other.
If OP's vendor's solicitor didn't tell him he was only getting 5% on exchange then he is at fault. If OP cannot complete for whatever reason then the full 10% is due, not just the 5% provided, and it might be difficult for the vendor to obtain this from OP if there is no money.

kingstreet

eddddy wrote: »

I strongly suspect that it's simply the case that contracts were exchanged specifying a 5% deposit.

But the seller didn't realise because they failed to read something properly - or perhaps even the seller's solicitor agreed to a 5% deposit without properly consulting the seller.

I think that explanation is far more likely than a solicitor exchanging contracts without funds in place for the deposit - that would be grade A* negligence (or stupidity).

So that would mean neither buyer or seller have anything to worry about - unless the buyer fails to complete.

I agree. Both solicitors were aware of the 5% deposit, otherwise exchange could not have taken place.

The vendor's issue is with his solicitor, not the purchaser!

moneyistooshorttomention

mrschaucer wrote: »

I know in this instance there is no upward chain, but imagine there were. Mr A at the bottom can only afford a 5% deposit at exchange. Mr B, next one up, is expected to cough up a 10% deposit to give to Mr C, who also has to find 10% for Mr D at the top. Mr B was originally expecting 10% of his sale price to come from Mr A and knew he then had to find a few thousand extra to meet Mr C's contract, which he could just do. What he might find impossible to do is effectively pay Mr A's "missing" 5% as well. That's why the whole chain needs to agree on 5% deposits for everyone involved, and why solicitors need to talk to each other.
If OP's vendor's solicitor didn't tell him he was only getting 5% on exchange then he is at fault. If OP cannot complete for whatever reason then the full 10% is due, not just the 5% provided, and it might be difficult for the vendor to obtain this from OP if there is no money.

Or, put quite another way, it's very fortunate for OP that their vendor isn't in a position that they have to use OP's 10% deposit as a "pass on" 10% deposit on the house they are buying themselves - as they aren't buying one themselves.

OP has got very lucky indeed there that their vendor isn't being put out in an onward purchase by OP only having put up half of the 10% deposit they were due to.

...and...yes....I've been in a very similar position on my first house. I knew I was putting up a whacking great deposit on it (not just the standard 10%) but none of it was coming from my own personal resources. Then they demanded 10% instantly - that I simply hadnt made available. I had no option but to grab all sorts of money together from all sorts of sources and lend that temporary 10% deposit out (and then recover it back when the source of supply of my large deposit handed over the money they were paying towards that house and I was able to get my own personal 10% I'd loaned out from my own personal money back again). Talk about squeezing until the pips popped out to be able to manage to do that - but it was done.

borkid

mrschaucer wrote: »

I know in this instance there is no upward chain, but imagine there were. Mr A at the bottom can only afford a 5% deposit at exchange. Mr B, next one up, is expected to cough up a 10% deposit to give to Mr C, who also has to find 10% for Mr D at the top. Mr B was originally expecting 10% of his sale price to come from Mr A and knew he then had to find a few thousand extra to meet Mr C's contract, which he could just do. What he might find impossible to do is effectively pay Mr A's "missing" 5% as well. That's why the whole chain needs to agree on 5% deposits for everyone involved, and why solicitors need to talk to each other.
If OP's vendor's solicitor didn't tell him he was only getting 5% on exchange then he is at fault. If OP cannot complete for whatever reason then the full 10% is due, not just the 5% provided, and it might be difficult for the vendor to obtain this from OP if there is no money.

Years ago, about 35, I asked my then solicitor this very question as we were in a long chain and didn't have the full deposit and wouldn't because the final bit of the 10% would only be there on completion. My solicitor said don't worry we have ways of making it work. All went through with no problems.