Developer won't accept deposit until contracts are signed. Is this legal?

[jinty]

Hi Everyone,

A friend is buying a new property from plans. The developer won't accept a deposit until contracts are signed on previous property. Is this legal?



It sounds like they want to sell the whole development to an institutional investor?



Thanks!

 

[Leo]

Of course it is, Without a contract being signed a deposit is largely meaningless anyway.

Some developers will accept a booking deposit in advance of the full deposit, but it's standard practice that they insist on contracts being signed at deposit stage. Also, most will insist on the use of their standard contracts that will not allow a purchaser to insert a 'subject to finance' clause.

It sounds like they want to sell the whole development to an institutional investor?

Their finance to complete the development is likely contingent on having most or all the units sold at this stage.

 

[ClubMan]

Without a contract being signed a deposit is largely meaningless anyway.

But, as I understand the original post, the contract in question has nothing to do with this property purchase. It's the one relating to the sale of the prospective buyer's previous property/home to which the developer is not a party.

 

[Leo]

But, as I understand the original post, the contract in question has nothing to do with this property purchase. It's the one relating to the sale of the prospective buyer's previous property/home to which the developer is not a party.

Oh, you're right, I misread that.

Ultimately however it doesn't change the situation and the developer is entitled to seek assurances the buyer will have the funds in place to close out the purchase on schedule. Some won't even entertain offers from potential purchasers who have yet to sell a property to release the required funds.