Deposit on Freehold Purchase

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    Deposit on Freehold Purchase

    We have decided to buy the freehold of our two flat building. Our surveyor has negotiated a price with the freeholder that we are happy with and this has been done by agreement rather than through the statutory route. The freeholder has written to us and asked for a deposit to “initiate the process” and has stated that the deposit is non-returnable.

    Is this what usually happens? It seems strange to be paying the freeholder this money when we are nowhere near actually purchasing the freehold. Presumably they could walk away at any point and we would lose that money?

    #2
    I suggest you check the freeholder title and site plan at Land Registry is registered under the name of the freeholder and the plan corresponds to the boundary for your building and postcode. before proceeding ?

    The deposit for Sale and Purchase of the freehold title should be paid to your solicitor.

    Comment


      #3
      No, i would not do it. The deposit is returnable if the freeholder decides to withdraw. And yes it is payable to your solicitor who would pay the freeholder solicitor.
      we just maid one payment for our freehold

      Comment


        #4
        Maybe the deposit is to cover his costs should you decide not to proceed once legal paperwork has been prepared and issued? Doesn't seem unreasonable to me without knowing how much is at risk.

        Comment


          #5
          It could be harmless, the freeholder could be testing whether or not you are serious, otherwise you could delay matters and then pull out. It depends on the amount involved, maybe you could negotiate a lower amount or offer to place it with your solicitor to signify that you are serious.

          Comment


            #6
            Originally posted by chris1544 View Post
            we are nowhere near actually purchasing the freehold.
            So you've agreed a price both parties are happy with ? I don't think you could get any nearer purchasing without actually signing the TR1.
            ​​Using the statutory route a deposit would be payable so I see no issue in paying 10% to his solicitor.

            Comment


              #7
              Pay £5 deposit. Job done.
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

              Comment


                #8
                You could offer £1 but it is unlikely to be acceptable. Another alternative is to offer a quick completion which could avoid the need for a deposit to be paid.

                Comment


                  #9
                  Thanks everyone, good to know this is not too unusual. Yes Section20z you're right, we are probably are much closer to actually buying than I thought.

                  Anyway our solicitor is just going to check a couple of things with their solicitor and if that's all fine then we'll pay.

                  Comment

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