Paying estate agent with cash, not sale proceeds?

eddddy

I'm not sure that I follow your logic, but the payment method is a contractual matter between you and the EA.

If you're happy with a particular payment method, and the EA is happy with the payment method - that's fine.

I'm not sure if you're saying that you want to avoid money laundering checks, but Estate Agents are regulated business, and they have to abide by Money Laundering and Terrorism Financing Regulations. So they might want to do their own AML checks - especially because what you're asking to is unusual, and therefore a bit suspicious (and it doesn't sound like you have a good explanation for doing it).

In case you're interested, here's the AML guidance for estate agents: https://www.gov.uk/government/publications/money-laundering-regulations-2007-supervision-of-estate-agency-businesses/estate-agency-guidance-for-money-laundering-supervision

Anamox

eddddy said:

I'm not sure that I follow your logic, but the payment method is a contractual matter between you and the EA.

If you're happy with a particular payment method, and the EA is happy with the payment method - that's fine.

I'm not sure if you're saying that you want to avoid money laundering checks, but Estate Agents are regulated business, and they have to abide by Money Laundering and Terrorism Financing Regulations. So they might want to do their own AML checks - especially because what you're asking to is unusual, and therefore a bit suspicious (and it doesn't sound like you have a good explanation for doing it).

In case you're interested, here's the AML guidance for estate agents: https://www.gov.uk/government/publications/money-laundering-regulations-2007-supervision-of-estate-agency-businesses/estate-agency-guidance-for-money-laundering-supervision

I've stated that I'd rather do the EA's money laundering checks to avoid a potential re-submission of my mortgage application if I went through the lender's money laundering checks, people have clearly stated on the forum that their offers are being nullified on various reasons which most would call ridiculous. 

I personally don't think it's an unusual situation when someone doesn't have enough equity to pay their next property deposit, stamp duty, EA fees and solicitors thus has to pick and choose which elements they want to pay with cash.

blue_max_3

I guess you are doing a kind of money laundering. Fully legal and above board I may add. Can't argue with the logic.

eddddy

Anamox said:

I've stated that I'd rather do the EA's money laundering checks to avoid a potential re-submission of my mortgage application if I went through the lender's money laundering checks, people have clearly stated on the forum that their offers are being nullified on various reasons which most would call ridiculous. 

It does sound like you're overthinking this. You're buying your new property with the proceeds from your sale, and paying your EA fees from your savings - it's not a problem.

Anamox said:

I personally don't think it's an unusual situation when someone doesn't have enough equity to pay their next property deposit, stamp duty, EA fees and solicitors thus has to pick and choose which elements they want to pay with cash.

You personally don't think it's an unusual situation to pay the EA direct - but your EA will think it unusual, and your solicitor will think it unusual.

And because you don't have a logical reason for doing it, it's likely to make your EA suspicious - either that you're money laundering, or planning to 'do a runner' without paying them. But if your EA agrees to your plan, that's fine.

(I know that you think your reason is logical, but I don't think anyone else will agree with you.)

macman

To state the obvious, they are going to want the money in their account before completion, even if only by a few hours. So, if anything then disrupts or delays completion,  you'll be down by £4K.

davidmcn

macman said:

To state the obvious, they are going to want the money in their account before completion, even if only by a few hours.

I'm sure they'd want the money in their account as early as possible, but completion will still happen whether or not the EA has been paid. They can cope (as they usually do) with being paid after completion.

macman

That's because they know that they can trust the solicitor to set aside the funds to pay them, but in this case they will make it very clear to the solicitor that completion must not happen until they have received the funds direct from the vendor. 

davidmcn

macman said:

That's because they know that they can trust the solicitor to set aside the funds to pay them, but in this case they will make it very clear to the solicitor that completion must not happen until they have received the funds direct from the vendor. 

The agents don't get to decide whether or not completion happens.

eddddy

TBH, if you really want to, you could probably just tell your solicitor not to pay the EA's bill, and not give any reason, and without telling the EA.  And then just pay the EA yourself on completion.

The EA might be very annoyed, if they then have to do additional AML checks. And technically, it might put you in breach of contract. For example, here's an extract from a random EA's contract:

Where completion takes place within 4 weeks of exchange, you hereby agree to irrevocably authorise your solicitor to discharge our account on the terms set out in this agreement within 7 days of completion from the proceeds of sale without further recourse to yourself.

But they won't have suffered a loss (apart from any time spent on AML checks), so I doubt there'd be any serious repercussions - assuming you pass the AML checks.

macman

davidmcn said:

macman said:

That's because they know that they can trust the solicitor to set aside the funds to pay them, but in this case they will make it very clear to the solicitor that completion must not happen until they have received the funds direct from the vendor. 

The agents don't get to decide whether or not completion happens.

Obviously, but there's no reason why the solicitor would not co-operate with them in this instance.