CGM solicitors incorporating ChartahouseHead Office
2/5 College Place Southampton, SO15 2UT, United Kingdom, 02380 632733/02380 842765, enquiries@c-g-m.co.ukThe Deposithttp://www.c-g-m.co.uk03:19 07-Sep-2010
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the deposit
If you are buying property, you are expected to pay a deposit on exchange of contracts. Over the years I have found the word “ deposit” can cause a certain amount of confusion. To a lot of people, including mortgage lenders it would seem, a deposit is a sum a purchaser is putting in; that is to say, the difference between the mortgage advance and the purchase price. It is often only with the greatest difficulty that I persuade clients that what I mean by a deposit is a down payment of part of the purchase price – similar to the sort you might make if you were buying a car.
A sale contract generally assumes that 10% of the price will be paid when the contract is entered into and that if the purchaser does not have that amount of cash then his solicitor has to negotiate with the Seller’s Solicitor to get him to agree to less.
It is very common nowadays for a reduced deposit to be paid. Examples of this are where a Purchaser is getting a high percentage mortgage. In cases where there is a chain, where possible I seek to use the deposit coming from my client’s sale to fund the deposit on the purchase.
You may wonder why a deposit is necessary. The main reason is that it shows good faith and acts as a deterrent – in other words people are less likely to enter into contracts they have no intention of completing. If you are selling your property and completion comes and goes and the balance purchase monies are not forthcoming from your purchaser, after a few days you can give formal notice to complete. If this does not do the trick you can keep the deposit. If your Purchaser has paid less than 10% you are entitled to the balance of this. Like all legal remedies this sounds great on paper, but being successful in enforcing this depends on the person a) not disappearing and b) being good for the money.
The moral of this last point is that if you are a Purchaser offer as small a deposit as you can get away with. If on the other hand you are a Seller, ask for as much as you can as it might be all you get if things go wrong. Inevitably though there must be give and take or in to-day’s fast world of conveyancing the process would be unduly delayed |
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