purchasers signed contract without paying 2nd deposit

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bonnie1

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Hi

I have bought house in new development, contracts are signed and due to close in 4 weeks. The purchasers of my current house have payed booking deposit, and have now signed contracts but without paying 10% deposit. Im told by my estate agent that they are getting 100% finance, and dont have this sort of money at the moment. He's advising me to go ahead. Surely this is risky for me? Things are getting very tight now, would appreciate some advice. Thanks.
 
As long as they have cast iron approval on the full 100% and their solicitor can therefore GUARANTEE that he can draw every penny of it down in the one whack , giving an undertaking to so do and a date by which it will be done in full , then all is not lost.

As they were supposed to give you 10% and did not you may charge interest on that 10% or else force them to complete sooner in lieu of that interest.
 
As having worked in the mortgage broker game and banking for the last 10 years I can tell you that most of the lenders that offer the 100% mortgages also offer a facility for applicants to draw down the 10% necessary for contract signing, usually in the form of a personal loan cleared by the subsequent mortgage.
I would not be happy that they did not pay 10% on signing and would make this very clear to the Auctioneer. What if they pull out of the contract? Are you realistically going to go to court to attempyt to enforce this contract, and the obvious cost involved in that. The very point of the 10% deposit is to give the vendor something if the buyers pull out leaving him/her high and dry so to speak.
 
I would be inclined to get something off them-I presume that you can insert the amount of the booking deposit into the contracts as the full deposit? I would certainly want some kind of insurance that they won't pull out at the last minute.
 
Or at least secure the booking deposit as a non-refundable amount.
 
What do you mean when you say they have paid a "booking" deposit. It's not a new build so the first payment should be 10%. How much did you get, as, if they have signed contracts and subsequently pull out this is probably as much as you will get out of them.
 
Sorry, I meant they paid the initial 5,000 euro to the estate agent but did not pay a further deposit when they signed contracts.
 
My feeling would be it depends on the closing date on the contract. If it's close then you can just be strict on enforcing the date but if its many weeks/months I would insist on the balance being paid. €5k will hardly cover your expenses if they default.
 
"As long as they have cast iron approval on the full 100% and their solicitor can therefore GUARANTEE that he can draw every penny of it down in the one whack , giving an undertaking to so do and a date by which it will be done in full , then all is not lost."


Solicitor should not and will not guarantee - this is not something over which the solicitor has control. The loan approval could be pulled if the purchasers cannot comply with something.

Purchasers should have made it clear that they could not or would not pay a full deposit and they should have negotiated that as part of the deal. Vendors are very vulnerable in these circumstances as they don't have a lump of money.

The whole process of buying and selling property requires huge faith and trust and the deal is only done when the deal is done.

mf
 
I'd be looking for copies of loan offer aswell.
We are having massive problems with the lady purchasing our house and she's paid the 10% so personally I'd be very wary anyway. We had "guaranteed assurances" that loan approval & bridging approval were in place and 1 month later she still hasn't everything sorted with her finance.
 
We ended up in the same situation as the OP, and were very sceptical
and are well aware that anything can fall through.
We were keen to sell and were not willing to put the house back on the
market.

we did get details of the loan offer and held our breath and it all worked
out OK in the end.
 
We just bought a house with a 100% mortgage.The vendor accepted the 5k booking deposit as a contract deposit without quibble. Not all banks will advance 10% or offer bridging so this scenario will become more common.

My solicitor had received the Mortgage Book from my bank before she asked the vendor to accept the booking deposit as a contract deposit, so she was confident that there wouldn't be an issue. I suggest that your solicitor ensures the buyer's solicitor has the mortgage book, too.
 
Hi, if your solicitor can get a copy of their loan offer of 100% then it should be fine, in particular as others have said, if the closeure date is pretty soon.
Lenders do provide a facility to allow draw down of the 10% but very often this involves a separate short term loan and requires a bit of additional admin (and cost) that the purchaser is trying to avoid.
 
Lauren said:
Hi, if your solicitor can get a copy of their loan offer of 100% then it should be fine, in particular as others have said, if the closeure date is pretty soon.
Click to expand...

It should be stressed that a loan offer is just that-in the worse case scenario the sale falls through, the bank withdraw the offer, and you are left with little or no recourse, i.e. there is little point in suing if they cannot go through with the purchase on their own.
 
Thanks for your help everyone. I got on to my solicitor and it is now arranged that they get bridging for the 10%.
 
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