10% deposit on Exchange of Contracts

keith7

Hi

We are selling a flat and not buying another property. Our buyer has a buyer and that's the chain. We exchanged contracts on 8th May but as of today 19th May my solicitor still hasn't received the 10% deposit. Completion is due on 31st May. My solicitor is chasing this, but does anyone know whether it's normal to wait this length of time for the deposit to be paid after exchange, especially bearing in mind it's a relatively short chain?

Keith

AnotherJoe

You don't normally exchange until the deposit has come across.
So something seems to have gone amiss.
Ask your solicitor.

buggy_boy

A 10% deposit is not always used, your buyer may not have the money till his is sold and if he got a deposit from his buyer will not want to pass that money on to your solicitor because then they have no security but are responsible for the deposit. You are where you are, just wait and see what happens but do not hand over your keys until your solicitor has confirmed the money has come in.

Nick_C

Everyone in a chain should exchange on the same day. The deposits pass up the chain. Its only the person at the bottom of the chain who had to find the full 10%.

If anyone breaks the chain, they are liable for the losses of everyone else in the chain.

You should find out from your solicitor why they allowed an exchange without receiving a deposit.

Your solicitor may be liable if anything goes wrong and the failure to secure a deposit was due to their negligence

AnotherJoe

Its not always 10% but it's normally something even if just a FTB 5% is being passed up the chain.
And if it's less than 10% it would be normal for you to have to agreee to it first.

keith7

Hi and thanks to all that took the time to reply.

A 10% deposit was agreed by all 3 parties in this chain, I just wanted to know if it was "normal" to wait for (up until today) 11 days and counting for the deposit to pass to my solicitor as I'm the end of this chain of 3! I will chase my solicitor on Monday! Thanks once again.

AnotherJoe

It should have happened on the day. So no, its not at all normal. Please report back.

buggy_boy

The issue is if the deposit moves up the chain say for example....

A - First time buyer
B - owns house worth 100k
C - owns house worth 200k
D- owns house worth 400k

A is buying B and B is buying C, and C is buying D

A pays 10k to B, if B passes it on to C they are still 10k short, if C passes to D, they are 30k short.

If D holds A deposit, but something happens to C which means D keeps the deposit, B cannot complete because of C, so owes A the deposit but does not have the deposit even though it is not B's fault.

Hence a deposit is not always asked for as a lot of people do not have funds until house is sold, usually only deposit asked from the bottom of the chain....

If 10% deposit was agreed to be paid to you then that is a worry and you should not have exchanged until the deposit was paid. are you buying? Have you paid a deposit? Have you exchanged on the place you are buying?

mrschaucer

If a 10% deposit was a condition of the contract, then your buyers haven't fulfilled their side of the deal. The buyers' solicitor would have made a declaration to yours that he had the money and the exchange could go ahead - what happened?

glentoran99

buggy_boy wrote: »

The issue is if the deposit moves up the chain say for example....

A - First time buyer
B - owns house worth 100k
C - owns house worth 200k
D- owns house worth 400k

A is buying B and B is buying C, and C is buying D

A pays 10k to B, if B passes it on to C they are still 10k short, if C passes to D, they are 30k short.

If D holds A deposit, but something happens to C which means D keeps the deposit, B cannot complete because of C, so owes A the deposit but does not have the deposit even though it is not B's fault.

Hence a deposit is not always asked for as a lot of people do not have funds until house is sold, usually only deposit asked from the bottom of the chain....

If 10% deposit was agreed to be paid to you then that is a worry and you should not have exchanged until the deposit was paid. are you buying? Have you paid a deposit? Have you exchanged on the place you are buying?

But that's C's problem he then has to pay B & A

Richard_Webster

If all parties have exchanged then each buyer's solicitor will have given a professional undertaking at the time of exchange to his seller's solicitor to forward the deposit to him. If the deposit doesn't come then the solicitor in question can be sued/hauled before the Solicitors' Disciplinary Tribunal for breach of undertaking.

The non-arrival of the deposit up the chain suggests inefficiency somewhere but shouldn't jeopardise the transaction.