Deposit Forfeit

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    Deposit Forfeit

    Hello all,

    A sale that looked dead because of the virus might be going head. We are in the middle of three-property chain.

    I would like to know our legal position should we exchange and then our buyers' mortage falls through before completion.

    Do we both have to pay a deposit of 10%? Our buyer putting down (say) £30K, and us (say) £50K? If the chain collapses because our buyer can't complete, are we out of pocket for £20K?

    Can we claim that from our buyer? And how likely is the claim to be successful? Or is there insurance we can buy to protect our potential loss.

    There is a certificate of probate that has not yet been granted and both estate agents are talking about exchanging with completion to be dependent on that certificate. But if it takes weeks that seems to me to leave a long time for our buyers' financial position to deteriorate.

    Thank you for any advice, as usual.

    Goatrote


    #2
    There is no law that requires a 10% deposit to be paid. It is a matter for negotiation.

    If a purchaser fails to complete a purchase his deposit is forfeit. He is also liable to pay damages for any loss incurred by the vendor to the extent they exceed the deposit. Damages will usually be the amount (if any) by which the price agreed exceeds the price obtainable on a resale plus associated costs. They do not extend to any loss incurred by the vendor in relation to any connected purchase.

    No conveyancer whose client needs a mortgage will let him exchange contracts without a mortgage offer. Most mortgage offers last for a few months.

    Purchasers failing to complete is quite rare. In a career of 30 years I only met in once. The purchaser not completing is not something to be unduly concerned about.

    It is not really feasible for a chain to be made conditional on probate being obtained.

    Comment


      #3
      I would suggest that the agents are talking up the exchange in an attempt to protect their commissions...ignore them!

      Your transactions are only between you and your conveyancer to decide, the agent merely introduced the parties.

      Comment


        #4
        Originally posted by Tipper View Post
        I would suggest that the agents are talking up the exchange in an attempt to protect their commissions.
        Surely not!

        When I was working someone in the office was selling to someone else in the office. The agent rang up the seller and said the buyer was threatening to pull out if there was not an immediate exchange. The agent then rang up the buyer and said the seller was threatening to pull out if there was not an immediate exchange. Each left her room to ask the other what she on about and they met in the corridor. They had a good laugh when they realised what the agent was up to.

        One local firm had its switchboard programmed to divert all calls from local estate agents to voicemail.

        Comment


          #5
          Thanks for your response. I know failure completions are unusual, but so are global pandemics, was my thinking. But I take the point that there will be no exchange until probate is granted so it's not so much of an issue. When you say mortgage offers are valid for three months, does that include if your situations changes, like you lose your job?

          The plot thickened today anyway, as Japanese Knotweed has been found 10m away from the property we are meant to be buying!a

          Comment


            #6
            Originally posted by Goatrote View Post
            When you say mortgage offers are valid for three months, does that include if your situations changes, like you lose your job?
            Pass on that one.

            You can minimise any problem by having a short period between exchange and completion and remove it by exchanging and completing on the same day.

            Comment

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