On Exchange of Contracts: Is it normal for the seller to request deposit by the Buyer - 10% of asking price

[BroglieBoy]

We are in the process of buying a property and the Solicitor's letter mentions the below line:

"On exchange of contracts, it is normal for a Seller to request payment by the Buyer of a deposit of up to ten percent of the price. If you have not already made provisions, please telephone me so that arrangements can be made to let us have the necessary funds."

Our Situation:
We plan to request for a completion date of 2 months from the day we exchange the contract This will allow us to give 2 months notice to our landlord from whom we are currently renting a house.
We have the deposit ready and if it is a legal requirement then we can release the money on the exchange of contract. However, I don't think that is the case but I am not 100% sure.

Question:

1. Is it mandatory for us to release the deposit on the day of exchange of contract? I thought we need to release the money only a few days( 3 to 4 ) days before the completion date.
2. Can we decline this request?
3. Why should we release the money 2 months in advance and lose interest on the same.

Thanks

That's fair advice if you can afford to pay mortgage and rent for a month while the notice period expires on the rental. It doesn't mean the vendor needs to wait to complete for the entire notice period, this is a big ask and would be unusual in this system.

This is bad advice, because even if you've given notice and the notice period has expired you don't have to move out! You can inform the landlord that there has been a delay and you'll been a further month and there is nothing a landlord can do about it. That's why you need to communicate with the landlord as all professional landlords know that they will need to be flexible when tenants are moving into a purchased property.

I agree you've been given bad advice about completion dates. When we've been buying or selling, we've always discussed any unusual requests at the point of making or accepting an offer. I refused an offer that was made by someone who wanted a long time between exchange and completion.

Unless your vendor is not making an onward purchase, you will be the bottom rung in a chain of house purchases, and all those people will have to agree to a 2 month period between exchange and completion. I can tell you now that this is extremely unlikely to be agreed. You will have to suck up a period of time where you pay both mortgage and rent. This is normal when moving from rented to a house purchase; it's extremely hard to get everything lined up so you don't have responsibility for two outgoings. Unless you take a hit and move to a short term let or hotel.

At our current house we had a month between exchange and completion. That was practically unheard of. Usually it's 2 weeks give or take. We agreed a month (and so did the two sales below us in the chain) because the vendors of our house an adult child with special needs and she needed time to get her into appropriate accommodation. Otherwise it is most common for a week or two. I'd put money on people higher up your chain not agreeing to your terms.

OP, I used to be an estate agent in England for several years and I would say completion date demands were one of the main causes of arguments during the sales process, probably one below survey negotiations. The estate agent should have asked you about expected completion dates/timelines when you submitted your offer so they could discuss this with the sellers before they accepted your offer. It prevents all sorts of potential nastiness down the line.
I would make the agents aware of your timeframes ASAP so that they can ensure the vendors are aware. People often try and inform the other party at the last minute of their intentions for completion dates to try and force their hand (I am not saying you are doing this) worst case scenario it backfires and chains can fall through on the day of exchange with lots of wasted time and money, best case scenario it leaves a bit of a bitter taste and pettiness ensues, I have personally had to buy a buyer a new washing machine before because both parties couldn't agree on whether it should be included in the sale of a multi-million pound house! It wasn't about the washing machine really, it was because both buyer and seller were cross that their completion date demands hadn't been met and it became a bit of a d**k-swinging contest...
If there is a chain the vendors and agents will be in contact up the chain and will need to make others aware.

But that is not the same as delaying completion for two months. Overlapping rental and mortgage is very common so you need to be prepared to compromise,

A month is more realistic. Then you can use the overlap to do any minor work the house you’re buying needs.

I am a landlord & am flexible if people are buying. It gives me time to plan renovations, etc. If people stay, fine.

The system here is so used to dishonesty that people give advice based on that. It's actually better to be honest with everyone upfront.

How many are in the chain? I think as exchange was looming we gave notice then had then exchange completed in a week and had 2 week overlap - the agent found someone to move in quickly as well so waiver that.

in a huge chain getting everyone to agree to 2 months will be tough, one much easier.

but risking giving notice and an overlap are sadly part and parcel of the English buying system

Any non-standard terms attached to the offer should have been submitted with the £ offer! You can't add in an unusual conditions mid way through the process without losing trust and risking reopening other parts of agreed terms (including price or deciding not to sell to you).

If this is really a deal-breaker for you (it's normal so maybe reconsider that) then you are better off knowing now if the vendor will comply with your request before forking out cash for solicitor fees, surveys, searches etc.

You decide the completion date before exchanging. If your sellers are not happy with the two month gap, they may refuse to proceed. Ours tried to make us wait 5 weeks and I was absolutely furious. The solicitors and estate agents all agreed it was unusual and really not acceptable. You really should have been advised by your solicitors from the start on the normal process

In that case they need to give their head a wobble and exchange and complete was per the normal timescales in England. We always hear how wonderful the Scottish system is but now this buyer wants to take the piss!

To be fair they don't know how it works and seemingly nobody has explained to them, including their solicitors! I'm staggered that they've got to the point of exchange without anyone telling them that they can't ask for 2 months delay until completion however.

Though I'm not sure how they've got to this stage without asking people's advice on mumsnet if not IRL! I asked everyone I knew when I bought my first house! You don't know until you know, but surely you find out?

Sorry but two months between exchange and completion is ridiculous. It may suit you but it won’t work for the others in the chain. What happens in these situations is that unfortunately you have to pay the overlap of your rental and your new mortgage.

Yes, you don't tell them. We didn't. We had a 1 month notice from the date of last payment, so we exchanged on our usual rent payment date and gave notice that day. Meant a month overlap, but rent in advance, mortgage in arrears so never paid both in same month.

Our sellers hounded us to proceed quickly during Covid when everything was taking forever, as they and their baby were rapidly outgrowing the place. I really felt for them and lost sleep over how stressful it must have been for them, then when we got to exchange they asked for a three month delay for work related reasons. I was FUMING!!!!

OP should meet our previous seller - she announced at 4:30 the day before exchange that she wanted 4 months between exchange and completion.

(we walked away)

I'm wondering why the OP wants 2 months and not one month- they surely only need to give one month notice to their landlord, not 2?