Deposit worry

[notanotherlockdownsurely]

I'm a cash buyer and at the bottom of the chain of three.
So I'm purchasing a house for, say, £400,000
My vendors are downsizing to a smaller house of £200,000
Their vendors are going into rented accommodation.
So my question is at exchange ( any time now ) I'll be putting down a deposit of £40,000.
My vendors will be putting down a deposit of 20,000
The vendors vendor won't put anything down.
Now having a nightmare thought that, say, either my vendor or their vendor drops out between exchange and completion does that leave me losing 40,000?
I can't see that anyone else would lose out financially
So either I've got it totally wrong or
I lose 40,000
vendors lose 20,000 but gain my 40,000 ( hence actually make 20,000!)
vendors vendor gains 20,000

Please please someone tell me this cant be right

Only a party that doesn't complete is in danger of losing their deposit. Apart from you as a cash buyer, it's a paper exercise at exchange for those in the chain selling a house as the money comes out of the proceeds of the sale. Once everyone has exchanged - and the solicitors only do this once everything is in order and everyone can commit - then it's pretty much a done deal.

If you don't complete and it's the fault of your vendor rather than you then in theory you should get your deposit back.

As long as you’re not the one who pulls out, the contract will include clauses that essentially punish whoever pulls out post exchange. You’d get your deposit back.

We are the middle property in a chain of three , like in your situation the cash buyers deposit from the bottom of the chain will be passed to the top of the chain of three. So we are using the money our buyer gives us as a deposit for our purchase. This means it will less than the standard 10% (about 7% in our case) BUT we are still liable for the full 10% if we pull out after exchange. If your vendor pulls out after exchange you get your deposit back. If you pull out after exchange then your vendor could keep your deposit.

Oh God thanks so so much both of you
So to be clear,
If vendors vendor pulls out no-one loses anything?
If vendors pulled out would they lose their 20,000 deposit? I wouldn't lose anything?
If I pulled out I'd lose my 40,000?

Sorry another question
What are the implications to the vendors vendor if they pull out between exchange and completion?

I believe there is a % that is owed to people if their seller pulls out. So if the people going into rented pull out, they owe your seller their 20k + the additional fault price. Your seller could then still go ahead with their sale to you and find an alternative place until they buy or they could pull out and owe you 40k + an additional percentage (not sure how that works if they pull out because of their seller, though)

Someone may come and tell me I'm wrong, but I always believed you would have the additional money for "damages" if they pulled out.

Read the last bit.

Excellent, many thanks I can now hopefully sleep in a little more peace

Good luck and I hope everything goes smoothly but definitely don't worry about losing your deposit, there's no way people would allow that!

Thanks User43210
Must admit this is the most stressful purchase I've ever made.
And to think that I thought it would be a walk in the park with nothing to sell this time and cash in the bank!
What a difficult year