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Deposit on exchange flowing up the chain
Horizon81
Posts: 1,594 Forumite
I'm hoping someone can explain how a deposit flowing up the chain on a house sale works please.
I understand the concept of each buyer in the chain paying their deposit 'up the chain' but what happens if for any reason things fall through and the deposit needs to be forfeited (kept).
Say in a chain of 3 houses with each house price being higher than the previous. (As an example, Person A is a FTB, person B is both a seller and a buyer, person C is just selling and not buying anywhere else)
Buyer A pays 10% deposit to buyer Bs solicitor
Buyer B adds to this deposit, and passes it to person C at the end of the chain)
Lets say the chain falls apart. Person C is Ok as he has the deposit to recover any losses from but what about the guy in the middle? He doesn't have any deposit to call on does he, as he has effectively 'passed it up the chain'?
I understand the concept of each buyer in the chain paying their deposit 'up the chain' but what happens if for any reason things fall through and the deposit needs to be forfeited (kept).
Say in a chain of 3 houses with each house price being higher than the previous. (As an example, Person A is a FTB, person B is both a seller and a buyer, person C is just selling and not buying anywhere else)
Buyer A pays 10% deposit to buyer Bs solicitor
Buyer B adds to this deposit, and passes it to person C at the end of the chain)
Lets say the chain falls apart. Person C is Ok as he has the deposit to recover any losses from but what about the guy in the middle? He doesn't have any deposit to call on does he, as he has effectively 'passed it up the chain'?
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Comments
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I'm hoping someone can explain how a deposit flowing up the chain on a house sale works please.
I understand the concept of each buyer in the chain paying their deposit 'up the chain' but what happens if for any reason things fall through and the deposit needs to be forfeited (kept).
Say in a chain of 3 houses with each house price being higher than the previous. (As an example, Person A is a FTB, person B is both a seller and a buyer, person C is just selling and not buying anywhere else)
Buyer A pays 10% deposit to buyer Bs solicitor
Buyer B adds to this deposit, and passes it to person C at the end of the chain)
Lets say the chain falls apart. Person C is Ok as he has the deposit to recover any losses from but what about the guy in the middle? He doesn't have any deposit to call on does he, as he has effectively 'passed it up the chain'?
That's not how failure to complete works. You each sue the person in the contract working backwards.0 -
In my example above Person B is a buyer and seller. If his deposit has passed 'up the chain', and then after exchange it all falls apart, how can he recover any money from Person A (the FTB)? Yes he could take him to court, but Person A doesn't have an asset or maybe no means to pay.
My query is around the physical 'deposit' and how it works in practice in a chain situation, in terms of protection for everyone.0 -
In my example above Person B is a buyer and seller. If his deposit has passed 'up the chain', and then after exchange it all falls apart, how can he recover any money from Person A (the FTB)? Yes he could take him to court, but Person A doesn't have an asset or maybe no means to pay.
My query is around the physical 'deposit' and how it works in practice in a chain situation, in terms of protection for everyone.
But you don't get to keep the deposit anyway, it's irrelevant!
C would sue B, B would sue A.0 -
OK ta, so what would happen to the actual deposit at the top of the chain? Does it get split between each member of the chain (depending on who caused the disruption?
I thought the whole point of paying a deposit upon exchange was as security for the seller(s) (e.g. to cover abortive costs for the seller(s), should the deal fall apart after exchange.0 -
Everyone is responsible for however much is stated in the agreed contract. If the contract states 10% but in reality less than this has passed up the chain, then you would be liable for the outstanding amount.0
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I have always thought that the practice unusual. If I was A buying from B and have paid 10% deposit then I would want B's solicitor to look after my deposit until completion.
After all that money is mine until such time as completion or failure on my part to complete happens.0 -
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