deposit Archives - Emyr Pierce

Jan 27

I changed my mind about buying a new house – can I get my deposit back?

I have made a commitment to buy a new property from a national developer. I have changed my mind and do not wish to complete. Will I be entitled to the repayment of my deposit?

Sometimes a prospective buyer will commit to buying a new plot from a developer, although the anticipated completion date of the plot can often be up to 12 to 18 months later. All developers now require prospective buyers to make a commitment to purchase at the earliest opportunity and, in most cases, within 28 days of paying a reservation fee on their plot.

While these deadlines are often extended to accommodate delays in the receipt of mortgage offers and other issues, the builder will proceed with the prospective buyer provided he is satisfied that the buyer is making genuine attempts to reach as early an exchange of contracts as is practicable.

The danger is that the projected completion dates for these new build properties can be up to 18 months in the future.

On exchange of contracts a contractual commitment is made on the part of both parties whereby the buyer is obliged to complete within 14 days of the developer notifying the buyer’s solicitors that the property is structurally complete. If the buyer wishes to withdraw following exchange of contracts, the buyer is strongly advised to contact the developer immediately.

The developer may sympathise with the buyers’ predicament and agree to cancel the contract and return the deposit. However, there is no obligation to do so and the risk is the developer will keep any deposit already paid.

Worse, the developer may hold you to the terms of the contract and insist you see it through. This would mean that you would have to complete when the building was structurally complete and then to immediately re-sell.

These are the dangers of committing to a purchase so far in advance. Personal circumstances can change.

* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk

Oct 1

How can I get on the property ladder?

I am a first time buyer, but I have very little deposit to put down and, of course, the Lenders have stopped all 100% mortgages. Does that mean I have no chance of getting on the property Ladder?

Unfortunately, it does – unless you can find wealthy parents who are willing to lend you the balance of your 10% deposit, as most lenders will not lend more than 90% in the current market.

Any such loan or gift from your parents or any other third party will need to be disclosed to the Lender during the application process, and if your parents, for example, wanted to protect their investment by way of a second charge on the property, the majority of Lenders will not agree to this.

An alternative is to look at the availability of any shared ownership properties by enquiring of Housing Associations or the Local Authority, as this is another way of getting a foot on the property ladder in cases where you only own that proportion of the property that you can afford, with the balance being retained in the ownership of the Housing Association.

Most new build developments have, as a matter of policy, a certain number of units of such Social Housing as a condition of the initial development as required by the Local Planning Authority to provide first time buyers in the community with such an opportunity.

Aug 19

Can I choose my own conveyancing solicitor?

I put down a deposit on a brand new property on a housing development and the developers are insisting I use the conveyancing solicitors that they recommend. Surely I can choose my own solicitor?

Sadly, this is commonly the case, as developers inevitably select their “favoured” solicitors for whatever reason. It remains an important principle in the buying and selling process in this country that all purchasers have a free choice of whom they wish to represent them in the important conveyancing process.

You have every right to choose your own solicitor and usually the reasons given for instructing the developer’s choice of solicitor will be somewhat debatable such as “they are familiar with the development and will therefore not raise unnecessary enquiries”, or “they have acted on a number of plots and therefore know the development well and can deal with the matter more quickly than a solicitor who is unfamiliar with the development”.

A buyer must be satisfied that he or she is instructing someone who will act purely in their best interests, promptly and diligently, and has the necessary expertise and experience to understand all types of property development, and the buyers must be sure that their choice of solicitor is going to give them independent advice.

Any specialist property solicitor will have the necessary experience to ensure that your interest will be protected and it is important that the public has a completely free and unfettered choice of legal representation. You are free to instruct anyone you wish to act for you.

* Emyr Pierce is Managing Partner of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk

Jun 6

Why 15% deposits are highly irregular

I am almost at the stage of exchanging contracts on a property and have been asked to provide a deposit of 15% of the agreed purchase price. Is this normal and if I question it could I be in danger of losing the house?

It is a standard contractual obligation that the buyer is required to provide a deposit of 10% of the purchase price on exchanging contracts – but not 15 per cent. In fact, it is common these days for sellers to accept a reduced deposit as contractual terms will cover the vendor in the event of the matter proving abortive and the seller having to request the balance of the 10% from the buyer.

It is also commonplace that whatever deposit is available at the bottom of the chain, this will be passed up the chain or, indeed even more common these days, the deposit is held by the solicitor at the bottom of the chain to the order of those higher up the chain.

It is a specific condition of the contract that, in the event of the buyer failing to complete, the seller is entitled to forfeit the deposit. If however a deposit of less than 10% is handed over on exchange, this would potentially prejudice a seller and, accordingly, all sale contracts contain a Special Condition whereby the seller can compel the buyer to pay the balance of the 10% deposit in the event of the buyers’ failure to complete.

Only in extreme circumstances, often where a protracted completion date of, say, 6-12 months is agreed, could the buyer be asked to provide a larger deposit. In the absence of such circumstances, any request for a deposit in excess of 10% should be refused.

• Emyr Pierce is Managing Partner of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk