Our Jargon Buster series explains some of the common parts of the Conveyancing Process.
What is a deposit?
This is a sum of money, usually 10%, paid by the buyer to the seller on exchange of contracts. The deposit legally binds the seller to sell, and the buyer to buy on the agreed completion date (also fixed on the exchange date). This deposit is non-refundable if the buyer does not proceed to completion.
This is known as an Abortive Transaction and at AVRillo we pride ourselves on having an Abortive Transaction Rate of only 5% unlike the industry average of 33%. Choosing AVRillo as your conveyancer means you are much more likely to move.
Why do I need to pay a deposit?
Deposits help make property chains work. When you are a 2nd Stepper and selling your existing home to buy a new one you, will use the deposit paid to you to help fund the purchase of your new home.
Can the deposit be less than 10%?
Sometimes the buyer will not always be able to provide a full 10% deposit, this may be because they are obtaining a 95% mortgage, or they are receiving less money coming up the chain.
If you are a seller, this means that on exchange you will be paid the reduced 10% deposit, sometimes 5% if normal. However, your sale contract ensures that if anything goes wrong and the buyers cannot complete then you keep the buyers 10% deposit. If the buyer doesn’t put the 10% deposit down, then the seller will have to pursue a claim.
At AVRillo the chance of a failed completion is slim, but it is still a risk for you to be aware about.
DON’T PAY until your Conveyancer sends the Report on Title
You will be notified by your conveyancer when they send you a Report on Title in a letter telling you the next steps you need to take to proceed towards Exchange of Contracts.
When does the deposit need to be paid by the buyer?
On exchange of contracts. It should arrive with your lawyer a few days to a week or more in advance.
Why does the deposit need to be paid before the exchange date?
Your seller’s solicitor requires that your deposit is in your Conveyancer’s bank as cleared funds before they will allow Exchange to happen.
Many buyers send their deposit up to a week in advance to ensure those funds are cleared and ready to be transferred to the seller solicitors on the day of Exchange. We recommend that you send the deposit as soon as possible to avoid any delays which might affect your Exchange.
How do I send the deposit?
By Bank CHAPS/ TT (Telegraphic Transfer). We advise clients not to use BACS or cheques as these take time to clear and cause delays. Your Conveyancer will have provided their bank details to you in the very first letter that they send to you.
Talk to AVRillo – We Get You Moving
AVRillo are an award winning nationwide conveyancing team with a 95% success rate on all property transactions.
If you are looking for a Conveyancer that can get you moving talk to AVRillo.