Exchanging Contracts Without the Full Deposit

Brian Cannan: Today I'm with Greg Jemmeson from Jemmeson Fisher Solicitors and Accountants. Good afternoon Greg.

Greg Jemmeson: Hi Brian.

Brian: A subject we want to talk about is contracts exchanging without a deposit or part deposit. What's your suggestions on that.

Greg: Well obviously we can't exchange a contract with no deposit because there has to be some consideration otherwise it would not be a valid contract. Obviously the situation that arises for a lot of agencies where somebody wants to acquire a property but they don't have the full ten percent and as the market is getting higher and higher it's not always possible for somebody to have that full ten percent. Now what a lot of agents will ask is what do I put on the front page of the contract if I'm receiving anything less than the ten percent say five percent. In that instance you still need to put ten percent on the front page of the contract as that is a requirement of the contract. What then happens is the agent doesn't have the ability to put in any special conditions as we know we can only fill in the black box what they need to do is to be able to arrange with the solicitor and generally they'll have good relationships with their local solicitors to provide them with a special condition which they're happy with that solicitor that they can insert in the contract which will allow for the payment of the balance of the ten percent deposit on completion, however if there is a default by the purchaser during the settlement period then the vendor is still protected and has the ability to claim the full ten percent in damages should they need to do so.

Brian: What happens if all parties agree to a five percent deposit can you put down five percent and then the liability is only five percent?

Greg: If that is agreed by the parties, but my advice will be to still leave it at ten percent on the front page of the contract.

Brian: Okay well I think that clears up a lot on contracts and deposits. Thank You Greg.

Greg: No worries Brian.