Deposit to be 'held strictly to order'?

lb00

Hi all,

I’m currently in the process of buying a leasehold flat, which has a sitting tenant. We’ve agreed to exchange contracts now, with the completion set for a month later, subject to vacant possession. If the tenant doesn’t leave within two weeks of the estimated completion date, we have the option to walk away from the deal.

We’ve also agreed with the sellers that the deposit will be held by our solicitor (as the buyer) and only released to the vendors’ lawyers once the tenant has vacated the property and we’ve inspected it.

However, the vendors’ lawyers are now insisting that the deposit be held "strictly to their order," without specifying the conditions under which they will release it. On the other hand, our solicitor is adamant that the deposit should not be "held to their order" but should be controlled by him and released to the vendors’ lawyers only after the conditions of vacant possession and inspection are met.

The vendors’ lawyers are continuing to insist on their terms ("held to order") without providing any further details.

What would you suggest in this situation? Any advice on how to proceed would be greatly appreciated.

Thanks in advance!

propertyrental

A sitting tenant is almost impossible to evict without a considerable financial incentive to give up their security.

Or do you mean an AST tenant?

anselld

Most would advise not to exchange until tenants have left.  Given that you are taking a risk and the vendor is trying to have their cake and eat it seems reasonable to stick with your Solicitor's position.

Has notice actually been served on the tenants?, because one month is insufficient to do that even if the Tenants cooperate with the notice.

user1977

anselld said:

Most would advise not to exchange until tenants have left.  Given that you are taking a risk and the vendor is trying to have their cake and eat it seems reasonable to stick with your Solicitor's position.

Has notice actually been served on the tenants?, because one month is insufficient to do that even if the Tenants cooperate with the notice.

That's all been discussed in the OP's multiple previous threads about the same transaction...

loubel

It doesn't really matter which solicitor holds the deposit and neither is wrong for wanting to do so.

Your solicitor has recognised that the chance of completion happening when planned is very low and if you are likely to cancel the contract for failure to obtain vacant possession in time there's little point paying it over just to call it back.

The seller's solicitor wants to hold the deposit because this is standard and the seller will want the interest on it while you wait to see if completion happens.

saajan_12

loubel said:

It doesn't really matter which solicitor holds the deposit and neither is wrong for wanting to do so.

Your solicitor has recognised that the chance of completion happening when planned is very low and if you are likely to cancel the contract for failure to obtain vacant possession in time there's little point paying it over just to call it back.

The seller's solicitor wants to hold the deposit because this is standard and the seller will want the interest on it while you wait to see if completion happens.

The vendor's solicitor is not asking to physically hold the deposit though. They are saying they money would stay in the buyer's solicitor's accounts, but held to the vendor's solicitor's order. ie the vendor's solicitor can unilaterally demand it be transferred to them, whether the buyer or buyer's solicitor agrees or not. 

Basically the plan is the money stays in the buyer's solicitor's account, any interest stays on that side, but both solicitors want to have the control over deciding when its released. 

OP, I'd let your solicitor battle this out. If you're buying with a residential mortgage, then you do want to retain the ability to check the property is actually vacant. 

loubel

Oh yes, I see. In that case the seller's solicitor is correct, unless you've changed standard contract terms.