Buyer only has 1 per cent deposit at exchange on leasehold sale

[Paulafernalia]

We are saying our leasehold flat and are 6 months into the process. We thought we were finally close to exchange but buyer’s solicitors have emailed today to say their funds are mostly in a LISA and therefore they can’t pay the 10% deposit on exchange. They only have 1% in cash. They suggest we exchange with this reduced deposit or do a SIM. Our solicitor is suggesting we do the latter.

I am so confused. Why can they not use their LISA funds for the deposit? And why would we do a SIM? I know I should ask our solicitor, and I will on Monday, but my head is spinning…

Gov website says “if you use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them”

I think it's something to do with the time between releasing the LISA funds and completion. I had similar my buyers had 5% and needed 6 weeks between exchange and completion, possibly because they had to give notice on a rented property. For me there was no chain as I had already bought my new house. If the sale had failed to complete, the 5% would have paid my solicitor (and left me a bit) and I would still have (reluctantly) owned the house, but this was 2020 and I had accepted the offer 3 days before the first lockdown, just getting to exchange had been an epic process I had no desire to prolong.