Exchange Deposit

ooga_chaka

Hi - can some please explain the 10% exchange deposit process and this is something I wasn't aware off until my solicitor sent a letter along with other documents such as Searches/ Statement of Fees etc..

We are in a chain. Our house sale price is 250k and we are buying a property for 367k.

The letter advises a 10% exchange deposit is needed, but they will endeavour to use our buyers for ours.

If our buyer has the 25k deposit and that is passed up to us to use, what it the likelihood we will have to find an additional 11.7k to pass up the chain? 

Also if we did have to stump up that amount (no idea where that would come from - not sure if equity can be used?) I assume it comes back to us post completion?

Thanks in advance

user1977

ooga_chaka said:

I assume it comes back to us post completion?

Not post-completion - at completion. It's part of the price.

kingstreet

ooga_chaka said:

Hi - can some please explain the 10% exchange deposit process and this is something I wasn't aware off until my solicitor sent a letter along with other documents such as Searches/ Statement of Fees etc..

We are in a chain. Our house sale price is 250k and we are buying a property for 367k.

The letter advises a 10% exchange deposit is needed, but they will endeavour to use our buyers for ours.

If our buyer has the 25k deposit and that is passed up to us to use, what it the likelihood we will have to find an additional 11.7k to pass up the chain? 

Also if we did have to stump up that amount (no idea where that would come from - not sure if equity can be used?) I assume it comes back to us post completion?

Thanks in advance

Usually, it is agreed that the first cash in the chain passes up the chain becoming a smaller percentage of each purchase as it reaches the top. In 38 years, I've never had a client asked to make up the difference. Solicitors can usually sort this among themselves. You still remain liable for 10%+ in the event of failure to complete.

Soot2006

Solicitors can almost always negotiate a lower exchange deposit in chains. In fact, after stressing myself silly with extra saving up before our move to meet the 10% deposit, my solicitor never even mentioned it and our contracts said 6% which came straight from the buyers

ooga_chaka

Thanks all, sounds like it isn't reallt something to worry about 👍

woodpeckerx

kingstreet said:

ooga_chaka said:

Hi - can some please explain the 10% exchange deposit process and this is something I wasn't aware off until my solicitor sent a letter along with other documents such as Searches/ Statement of Fees etc..

We are in a chain. Our house sale price is 250k and we are buying a property for 367k.

The letter advises a 10% exchange deposit is needed, but they will endeavour to use our buyers for ours.

If our buyer has the 25k deposit and that is passed up to us to use, what it the likelihood we will have to find an additional 11.7k to pass up the chain? 

Also if we did have to stump up that amount (no idea where that would come from - not sure if equity can be used?) I assume it comes back to us post completion?

Thanks in advance

Usually, it is agreed that the first cash in the chain passes up the chain becoming a smaller percentage of each purchase as it reaches the top. In 38 years, I've never had a client asked to make up the difference. Solicitors can usually sort this among themselves. You still remain liable for 10%+ in the event of failure to complete.

I just added 33k to my buyers deposit to make it up to 10% of my purchase price as requested by solicitor, I assumed this was normal practice.

macman

If you weren't aware of the 10% deposit required at exchange of contracts, how did you buy your current property?