Question: We are close to exchange of contracts on the sale of our property, and we may need to go into temporary accommodation until we find a suitable home to buy. But we have already borrowed up to the hilt and we will not be able to pay off our debts until we complete the sale of our place.
I understand our buyer will pay a deposit to our solicitor. While we wait to complete, are we able to use any of the deposit money to pay for removals and storage, temporary flat rental, cattery fees, the vet’s bill for up-to-date cat injections so the cattery will accept our pet, or for sundry subsistence?
Answer: I expect that your contract for sale is subject to the Law Society’s Standard Conditions of Sale, which generally provide for the deposit to be held as stakeholder by the seller’s solicitors.
This means that the deposit which your buyer pays on exchange of contracts will be held by your solicitors as stakeholder, and will not be released to you until completion of the sale. However, there is a way in which all or part of the buyer’s deposit could be used by you towards a deposit on any related purchase.
You could ask your solicitors to reach agreement with your buyer’s solicitors that the buyer’s deposit may be held by your solicitors as agent. If this is agreed, then your solicitors as agent may hand over the deposit monies to you before completion.
However, it is unlikely that the buyer’s solicitors would advise their client to agree to this — because if you were to default on completion, it could prove difficult for the buyer to recover the deposit money. After all, you might have spent it.
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Fiona McNulty is a legal director in the private wealth group of Foot Anstey.