5% deposit - seller not aware?

G_M

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?

See post 3 in the thread. Explained there.

'Contract deposit' = the amount paid on Exchange, with the balance paid at Completion.

'Mortgage deposit' = the amount the buyer is contributing to the purchase price, with the balance provided by a mortgage lender.

The two things are completely unrelated.

Red-Squirrel_2

borkid wrote: »

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.

Yep, its standard, solicitors should be well on top of it.

In a chain, its rare for each 'rung' of the ladder to have the full 10% because most of it is tied up in equity and the 10% received from the rung below is nowhere near 10% of the purchase price going up.

Competent solicitors arrange for the actual amount to be smaller with a commitment that the full 10% will be owed if completion doesn't happen.

tiff25

I can't believe he contacted you directly asking where the rest of the deposit was?? I don't even understand why it matters to him? surely he will be getting all the money at the same time anyway.

With my first house we bought we had a 100% mortgage and had no deposit what so ever. At no point did anyone ask us for a deposit or mention this 10% thing?? it was 12 years ago though. We are currently waiting to exchange on our new house and we are the 2nd in a chain of 4. All of our deposit is coming from the sale of our house and no one has mentioned us having a 10% deposit on exchange.

I honestly wouldn't worry if you have exchanged though you are pretty safe at this point, good luck

Pumpkim

tiff25 wrote: »

I can't believe he contacted you directly asking where the rest of the deposit was?? I don't even understand why it matters to him? surely he will be getting all the money at the same time anyway.

With my first house we bought we had a 100% mortgage and had no deposit what so ever. At no point did anyone ask us for a deposit or mention this 10% thing?? it was 12 years ago though. We are currently waiting to exchange on our new house and we are the 2nd in a chain of 4. All of our deposit is coming from the sale of our house and no one has mentioned us having a 10% deposit on exchange.

I honestly wouldn't worry if you have exchanged though you are pretty safe at this point, good luck

This!
Don't worry OP, your solicitor will be on top of this. We too bought with 100% mortgage as first time buyers about 12 or 13 years ago, and there was no physical deposit, all went through fine no questions asked. With our last move and this current move, our deposit is tied up in the equity from the sale so again no physical deposit and 10% of our sale price is far short of 10% of the purchase price so even then it won't be the full 10% getting passed up the chain. Solicitors are well aware of these circumstances, they happen all the time.
I imagine the seller has misunderstood somewhere along the line and needs to have a conversation with his own solicitor.

Soot2006

If 5% was in the solicitor's "funds required to complete" statement, which presumably also included all their fees etc etc etc, then clearly at least between the buyer and their solicitor the deposit situation was clear.

I don't think it's the buyer's responsibility to bypass their solicitor to negotiate this with the seller's solicitor. That's exactly what they have paid a solicitor for.

Someone messed up on communication, but it doesn't sound as thought it was the OP.

silvercar

Thrugelmir wrote: »

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.

This. The seller was maybe not aware that the solicitors had agreed a lower deposit. Definitely not the OP's fault.

As Thrug says, once completion happens no-one will care. The seller is not allowed to use the money in any case, so hasn't actually lost out.

ThePants999

I think some folks are being a bit unfair here. Sub-10% deposits are extremely common - 10% is a starting point, not a norm that is rarely deviated from. Yes, the buyer should ideally know their stuff, but the solicitor should also advise - and in this case, I think the solicitor judged that there was no need to as they just arranged for the 5% deposit with the other solicitor.

ThePants999

Soot2006 wrote: »

I don't think it's the buyer's responsibility to bypass their solicitor to negotiate this with the seller's solicitor. That's exactly what they have paid a solicitor for.

In fact, if the buyer has their own solicitor then the seller's solicitor will refuse to talk to the buyer directly!

LandyAndy

Bumblebee2128 wrote: »

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!

Not 105%? .

jamesmorgan

This case has all the hallmarks of the seller doing their own conveyancing. Normally the seller has no idea how much deposit has been lodged with their solicitor. If there had been a short-fall, their solicitor would raise it with the buyer's solicitor rather than with their own client.