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    • reg091
    • By reg091 5th Jul 18, 7:17 AM
    • 75Posts
    • 10Thanks
    reg091
    Deposit required on house purchase?
    • #1
    • 5th Jul 18, 7:17 AM
    Deposit required on house purchase? 5th Jul 18 at 7:17 AM
    We are very close to exchange on this scenario:
    Selling our house for 389K
    Buying house for 445K
    Funds for purchase of new house obviously coming from sale of existing, plus a new mortgage.

    Solicitors are saying that we cannot exchange until we lodge a 10% of purchase price deposit with them i.e. 44,500

    I understand the requirement for a deposit if you are first time buyers but not when it is an ongoing sale/purchase situation.

    Is this right? Where are we supposed to find that money?!! I thought the whole point of completion day was that was when all the funds got transferred around and everyone gets paid their full amounts.
Page 1
    • anselld
    • By anselld 5th Jul 18, 7:25 AM
    • 5,868 Posts
    • 5,589 Thanks
    anselld
    • #2
    • 5th Jul 18, 7:25 AM
    • #2
    • 5th Jul 18, 7:25 AM
    Ask them why they have not accounted for the 38,900 deposit from your buyers. You might need to make up the remaining 5,600.
    • kinger101
    • By kinger101 5th Jul 18, 7:25 AM
    • 4,466 Posts
    • 6,211 Thanks
    kinger101
    • #3
    • 5th Jul 18, 7:25 AM
    • #3
    • 5th Jul 18, 7:25 AM
    Normally, the deposit you received (38,900) would be passed up the chain. You need to make up the difference (unless your vendor agrees to a lower amount).
    • SG27
    • By SG27 5th Jul 18, 7:40 AM
    • 2,454 Posts
    • 1,729 Thanks
    SG27
    • #4
    • 5th Jul 18, 7:40 AM
    • #4
    • 5th Jul 18, 7:40 AM
    I asked my solicitor about this situation when we met a few weeks ago.

    You still need to pay the deposit on exchange whether a ftb or not. You will get 10% so 38,900 deposit from your buyers. Normally your solicitor will have negotiated with your sellers solicitor to pay the a deposit of 38,900 instead of 44,500 for the house you are buying so less than 10% and this can be passed up the chain.
    • reg091
    • By reg091 5th Jul 18, 7:50 AM
    • 75 Posts
    • 10 Thanks
    reg091
    • #5
    • 5th Jul 18, 7:50 AM
    • #5
    • 5th Jul 18, 7:50 AM
    The actual wording from the solicitor is: Please send via the banking system 10% of the purchase price or the difference between your mortgage if obtaining one, and the contract price (unless obtaining a 95% mortgage).
    • agrinnall
    • By agrinnall 5th Jul 18, 8:43 AM
    • 20,988 Posts
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    agrinnall
    • #6
    • 5th Jul 18, 8:43 AM
    • #6
    • 5th Jul 18, 8:43 AM
    It's late in the day, but I'd seriously consider finding a different solicitor who actually knows how to buy and sell houses, because it seems like this one doesn't have a clue.
    • saajan_12
    • By saajan_12 5th Jul 18, 8:51 AM
    • 1,430 Posts
    • 1,044 Thanks
    saajan_12
    • #7
    • 5th Jul 18, 8:51 AM
    • #7
    • 5th Jul 18, 8:51 AM
    The actual wording from the solicitor is: Please send via the banking system 10% of the purchase price or the difference between your mortgage if obtaining one, and the contract price (unless obtaining a 95% mortgage).
    Originally posted by reg091
    Sounds like a default response for a FTB. Instead of trying to further understand the precise wording, just query this with the solicitor:

    "Dear Solicitor
    Have we received the 10% deposit from the sale of xyz? Please confirm this 38k will be passed up the chain.
    Also, could we negotiate the vendors accept a lower deposit of 38k for the purchase of abc
    Thanks,
    reg"
    • wesleyad
    • By wesleyad 5th Jul 18, 8:53 AM
    • 289 Posts
    • 246 Thanks
    wesleyad
    • #8
    • 5th Jul 18, 8:53 AM
    • #8
    • 5th Jul 18, 8:53 AM
    Yeah some mistake, else they would be expecting deposits on situations where you were downgrading, which clearly makes no sense (eg you were selling for 450 and buying at 380)
    • SG27
    • By SG27 5th Jul 18, 9:02 AM
    • 2,454 Posts
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    SG27
    • #9
    • 5th Jul 18, 9:02 AM
    • #9
    • 5th Jul 18, 9:02 AM
    The actual wording from the solicitor is: Please send via the banking system 10% of the purchase price or the difference between your mortgage if obtaining one, and the contract price (unless obtaining a 95% mortgage).
    Originally posted by reg091
    Give them a call. They have probably forgotten what your situation is and sent a standard email out.
    • PasturesNew
    • By PasturesNew 5th Jul 18, 9:05 AM
    • 64,259 Posts
    • 377,155 Thanks
    PasturesNew
    As others have said, they're not expecting the 10% - you need to just point out to them that the 10% is in your equity.

    What happens if the chain exchanges and fails... is you would then be "forced" to hand that amount over...

    Deposits are rarely "actual cash" after the first purchase. It's more of a "promise to pay" you're making in your transaction.

    Either you or the solicitor is misunderstanding the wording or the situation.
    • reg091
    • By reg091 5th Jul 18, 9:29 AM
    • 75 Posts
    • 10 Thanks
    reg091
    Sadly, a bit of searching suggests that I absolutely do have to pay:

    https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/how-do-i-exchange-contracts/
    http://www.fridaysmove.com/deposit-%E2%80%93-when-buying-property/15506
    • hazyjo
    • By hazyjo 5th Jul 18, 9:40 AM
    • 10,885 Posts
    • 14,337 Thanks
    hazyjo
    Sadly, a bit of searching suggests that I absolutely do have to pay:
    Originally posted by reg091
    I've bought 8 properties and the deposit for 7 of them has come from up the chain. I have also had a similarly worded letter once which threw me into a panic. One quick phone call sorted it out. I now make sure I spell it out to my solicitor very early on that the deposit will be coming from up the chain.


    Stop panicking - speak with your solicitor. It's a pretty standard situation.
    2018 wins: Single Malt Whisky; theatre tickets; festival tickets; year of gin(!); shoes
    • reg091
    • By reg091 5th Jul 18, 9:49 AM
    • 75 Posts
    • 10 Thanks
    reg091
    Thanks all, advice and thoughts much appreciated.

    Not panicking, just feeling foolish that I didn't spot this at the beginning!

    I have just mailed solicitor for confirmation that deposit is passed up the chain, and that the most that we could expect to pay is the balance between the deposit received and the purchase price of our new property.
    • reg091
    • By reg091 5th Jul 18, 9:52 AM
    • 75 Posts
    • 10 Thanks
    reg091
    oh, and just received the reply: "With regards to the deposit, this is not applicable for your transaction as the same will be used from your related sale".

    So, clearly a standard email was sent to me, causing a sleepless night and much anxiety! Not very good customer service really....
    • ChrisK.....
    • By ChrisK..... 5th Jul 18, 10:01 AM
    • 218 Posts
    • 94 Thanks
    ChrisK.....
    My experience has been that all monies in the chain exchanged on the same day - So in your case the solicitors should get the whole 389K in the day of exchange - I cannot imagine what a 10% deposit has got to do with anything - If for any reason your solicitors have not negotiated the receiving of the whoooooooooooole 389K on THE DAY of exchange then you would have to sort out a bridging loan - still does not require 10%
    • jennhg88
    • By jennhg88 5th Jul 18, 11:05 AM
    • 182 Posts
    • 142 Thanks
    jennhg88
    This is useful info, we are putting an extra 41k of equity into our next purchase, 10% of purchase just happens to be just shy of 41k so we have the cash anyway. I did wonder what would have happened if this wasn't the case!
    • saajan_12
    • By saajan_12 5th Jul 18, 11:10 AM
    • 1,430 Posts
    • 1,044 Thanks
    saajan_12
    My experience has been that all monies in the chain exchanged on the same day - So in your case the solicitors should get the whole 389K in the day of exchange - I cannot imagine what a 10% deposit has got to do with anything - If for any reason your solicitors have not negotiated the receiving of the whoooooooooooole 389K on THE DAY of exchange then you would have to sort out a bridging loan - still does not require 10%
    Originally posted by ChrisK.....
    Nonsense.. You (on your sols) should get the balance of the 389k on the day of COMPLETION. On exchange, it would be 10% of this (or lower if negotiated)
    • letitbe90
    • By letitbe90 5th Jul 18, 11:23 AM
    • 89 Posts
    • 95 Thanks
    letitbe90
    This is useful info, we are putting an extra 41k of equity into our next purchase, 10% of purchase just happens to be just shy of 41k so we have the cash anyway. I did wonder what would have happened if this wasn't the case!
    Originally posted by jennhg88
    I've been able to negotiate down to 5% on a few exchanges I've done, I don't think it has to be 10%, there usually is some flexibility.
    • SG27
    • By SG27 5th Jul 18, 12:12 PM
    • 2,454 Posts
    • 1,729 Thanks
    SG27
    My experience has been that all monies in the chain exchanged on the same day - So in your case the solicitors should get the whole 389K in the day of exchange - I cannot imagine what a 10% deposit has got to do with anything - If for any reason your solicitors have not negotiated the receiving of the whoooooooooooole 389K on THE DAY of exchange then you would have to sort out a bridging loan - still does not require 10%
    Originally posted by ChrisK.....
    This is totally wrong. The 10% deposit is paid on exchange. The balance is paid on completion.
    • Surrey_EA
    • By Surrey_EA 5th Jul 18, 12:22 PM
    • 1,646 Posts
    • 2,189 Thanks
    Surrey_EA
    My experience has been that all monies in the chain exchanged on the same day - So in your case the solicitors should get the whole 389K in the day of exchange - I cannot imagine what a 10% deposit has got to do with anything - If for any reason your solicitors have not negotiated the receiving of the whoooooooooooole 389K on THE DAY of exchange then you would have to sort out a bridging loan - still does not require 10%
    Originally posted by ChrisK.....
    I think it is clear that you do not know what you are talking about.
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