Just found out that buyer's buyer has no deposit .. what now?

lucypilates

So the property was offered on in late Oct 2021 and we are only now at the point of exchange, which we are having to push for! Completion is in about 3 weeks time and the bottom of the 3-part chain was pushing for exchange and completion on one day. We said no - exchange ASAP please with completion when they requested.

Today i get an email saying that the bottom of the chain doesn't actually  have their 10% deposit (first we'd heard of this situation!) but they are willing to exchange if we are ... the contracts will still say that they owe 10% if they default but we won't actually hold any money.

I guess we just have to suck it up as we are so close now and if we go ahead with exchange with no deposit, we're better off than not going ahead with exchange on these terms in that at least it is legally binding and there is the chance we would get some compensation if they default by way of taking them to court if needs be ...?

Has anyone else had similar circumstances and/or insight they can share with me? 

thanks

Snookie12cat

They must have some deposit? They are not getting a 100% mortgage. Can they not offer less?
I suppose the money goes up the chain, so your seller/buyer may want you/them to put up a deposit instead. Normally the 1st buyers deposit goes up the chain.

Thrugelmir

The buyers buyers isn't your concern. What deposit has your buyer offered, % wise.

lucypilates

Thrugelmir said:

The buyers buyers isn't your concern. What deposit has your buyer offered, % wise.

That's what I was thinking ... I am waiting to have a chat about that with my solicitor. In my view, it's up to my buyer to decide if they're happy to exchange without their deposit ... we're still expecting him to pay his 10% deposit ... but somehow, it has been passed onto us which i'm not happy to accept ... but at the end of the day, i can't really 'make' someone pay a deposit if they don't want to and it could jeopardise the whole thing .. feel very pee'd off that it's my buyers problem that's been dumped onto us .. that's my take

BTW, we're the end of chain.

lucypilates

Snookie12cat said:

They must have some deposit? They are not getting a 100% mortgage. Can they not offer less?
I suppose the money goes up the chain, so your seller/buyer may want you/them to put up a deposit instead. Normally the 1st buyers deposit goes up the chain.

yes, they've been a bit sneaky the whole way through as far as i can tell. Disclosures and conveyancing issues along the way ... don't feel like exchange without deposit is enough peace of mind at this stage ...

Snookie12cat

It seems like your buyer does not want to part with a deposit, or they were using all the money from their sale to fund the purchase and so have no cash deposit either, which is why its been pushed back to you.

Might be worth asking your solicitor to find out your buyers deposit situation and trying to get them to put down 5% or 10%. If not, you really have no choice but to risk it at this point. Might as well exchange and see what happens. Maybe the threat of legal action would prevent them dropping out.

Gavin83

lucypilates said:

Thrugelmir said:

The buyers buyers isn't your concern. What deposit has your buyer offered, % wise.

That's what I was thinking ... I am waiting to have a chat about that with my solicitor. In my view, it's up to my buyer to decide if they're happy to exchange without their deposit ... we're still expecting him to pay his 10% deposit ... but somehow, it has been passed onto us which i'm not happy to accept ... but at the end of the day, i can't really 'make' someone pay a deposit if they don't want to and it could jeopardise the whole thing .. feel very pee'd off that it's my buyers problem that's been dumped onto us .. that's my take

BTW, we're the end of chain.

It's quite possible that the reason your buyer has spoken to you about it is that without their buyers deposit they haven't got the money to pay you yours. It would now require them to have 10% of the value of your house sitting there in cash, which I expect most people don't have unless they're a FTB.

Honestly were I in your buyers position there's no way I'd continue to offer a 10% deposit even if I had it, they'd be slightly insane to. Potentially their buyer could pull out, your buyer would then be left with nothing but having to lose the 10% they've paid to you. Sure they can write it into a contract but recovering it takes time, if it's possible at all.

Unfortunately I expect this'll end up causing your chain to collapse and I'd recommend preparing for this outcome.

lucypilates

Gavin83 said:

It's quite possible that the reason your buyer has spoken to you about it is that without their buyers deposit they haven't got the money to pay you yours. It would now require them to have 10% of the value of your house sitting there in cash, which I expect most people don't have unless they're a FTB.

Honestly were I in your buyers position there's no way I'd continue to offer a 10% deposit even if I had it, they'd be slightly insane to. Potentially their buyer could pull out, your buyer would then be left with nothing but having to lose the 10% they've paid to you. Sure they can write it into a contract but recovering it takes time, if it's possible at all.

Unfortunately I expect this'll end up causing your chain to collapse and I'd recommend preparing for this outcome.

so it's a case of just sucking it up and hoping?!? Just feel like we have no say in the matter and so we're in no better position, peace of mind wise, until completion day ... and if they've been this way about the deposit, how do we even know their mortgages are secure ...?? agh

babyblade41

Shouldn't the agent have checked the financial position right at the beginning? 

If they are FTB's they must have at least 5% , I don't think anywhere offers 100% mortgages now .

It really has nothing to do with you , it's your buyers  problem but it will effect you obviously if everything collapses .

I would want my 10% and wouldn't proceed without it being available 

lucypilates

Just spoken with my solicitor ... i'll update later after i hear back ... 

theartfullodger

With interest rates going up getting mortgages is bound to become tougher to get, their requirements, the financial tests..  Someone without a deposit is going to fail, sorry, even more quickly after today than before.