We were recently asked to provide our advice to a house purchaser who was due to exchange on the sale of his property but was informed on the day that the buyers did not have the agreed deposit. What could he do? Here our conveyancing team explain his options.
Q. We were about to exchange contracts on the sale of our house, and the purchase of our new one yesterday, when our solicitor informed us that our buyer only had a deposit of £12,000. This is not even 5% of the sale price.
We are buying for more than what we are selling. Our solicitor said originally, we would have to pay a 10% deposit on our purchase. We do not have savings and we were not expecting such a small deposit on our sale. What happens now?
A. Your solicitor should have established early on in the convention process, whether your buyer intended to pay a reduced deposit or the full 10%.
Ask your buyer to pay the full 10%. But, if they really cannot do so and you accept a lesser amount upon exchange of contracts, you are protected to a certain extent. You will have the right to sue the buyer for the full 10% deposit, plus any other losses due under the terms of the contract should the buyer eventually fail to complete the purchase.
However, the problem with accepting less than 10% is that although you can sue the buyer, they may not have any money to pay you, and your costs may increase. If your solicitor is holding a 10% deposit, then at least you know that your buyer is good for that amount.
This is a scenario that doesn’t occur frequently, but should you have a conveyancing related question please review our conveyancing FAQs or get in touch with our legal experts.