ASK the expert
Q&A Legal
thatÊheÊisÊtryingÊtoÊgetÊtheÊseller’sÊ solicitorsÊtoÊholdÊourÊdepositÊasÊ “ stakeholder” ÊratherÊthanÊ“ agent” ,Ê asÊitÊwouldÊbeÊbetterÊforÊus.ÊWhyÊ isÊthat?ÊAndÊifÊweÊpayÊ10ÊperÊcentÊ of the purchase price on exchange ofÊcontracts,ÊthenÊwillÊweÊactuallyÊ beÊpayingÊmoreÊthanÊaÊ10ÊperÊcentÊ deposit?
Get all your legal questions answered with our resident Solicitor Mark Hobbs, Managing Partner of Howells Solicitors
ForÊtheÊpastÊ12ÊmonthsÊIÊhaveÊ hadÊanÊassuredÊshortholdÊ tenancy.ÊIÊpaidÊaÊdepositÊatÊ theÊoutsetÊandÊIÊknowÊthatÊmyÊlandlordÊ placedÊitÊwithÊoneÊofÊtheÊrecognisedÊ tenancyÊdepositÊschemes.ÊHeÊhasÊ now said that I can stay on in my flat andÊthatÊheÊwillÊnotÊneedÊtoÊgiveÊmeÊ anotherÊassuredÊshortholdÊtenancyÊ agreement.ÊWillÊthatÊbeÊokay?ÊAndÊ whatÊwillÊhappenÊtoÊmyÊdeposit?ÊSurelyÊ IÊdoÊnotÊhaveÊtoÊpayÊanotherÊone?
QÊ AÊ
IfÊyouÊstayÊonÊatÊtheÊpropertyÊasÊ a tenant after the fixed term of yourÊassuredÊshortholdÊtenancy
hasÊended,ÊthisÊwillÊcreateÊaÊstatutoryÊ periodicÊtenancyÊandÊyourÊlandlordÊ doesÊnotÊneedÊtoÊprovideÊyouÊwithÊaÊ newÊwrittenÊtenancyÊagreementÊunlessÊ heÊwishesÊtoÊdoÊso.ÊÊYouÊdoÊnotÊneedÊ toÊpayÊanotherÊdeposit.ÊÊAsÊlongÊasÊ itÊcontinuesÊtoÊbeÊheldÊinÊtheÊsameÊ tenantÊdepositÊscheme,ÊitsÊstatusÊwillÊ not change. When you first became aÊtenantÊandÊyourÊassuredÊshortholdÊ tenancyÊagreementÊcommenced,ÊyourÊ
landlordÊshouldÊhaveÊprovidedÊyouÊ withÊprescribedÊinformationÊregardingÊ theÊtenancyÊdepositÊscheme.ÊTheÊ informationÊwillÊhaveÊcoveredÊsuchÊ mattersÊasÊtheÊaddressÊofÊtheÊrentalÊ property,ÊtheÊamountÊofÊtheÊdepositÊ andÊhowÊitÊwasÊtoÊbeÊprotected,Ê theÊnameÊandÊcontactÊdetailsÊofÊtheÊ relevantÊtenancyÊdepositÊprotectionÊ scheme,ÊdetailsÊofÊthatÊscheme’sÊ disputeÊresolutionÊserviceÊetc.ÊIfÊyouÊ haveÊanyÊconcernsÊoverÊtheÊdeposit,Ê youÊshouldÊcontactÊtheÊscheme. IfÊyourÊlandlordÊhasÊfailedÊtoÊprovideÊ youÊwithÊtheÊprescribedÊinformationÊ heÊmayÊstruggleÊifÊheÊtriesÊtoÊseekÊ possession of the flat from you at a laterÊstage. Ê
WeÊhaveÊpaidÊaÊreservationÊdepositÊ ofÊ£2,000,ÊbutÊnowÊourÊsolicitorÊsaysÊ weÊmustÊpayÊanotherÊ10ÊperÊcentÊofÊ the purchase price on exchange of contracts.ÊOurÊsolicitorÊhasÊalsoÊsaidÊ
QÊ
We are buying our first house off-plan.ÊItÊwon’tÊbeÊreadyÊtoÊ moveÊintoÊuntilÊNovember.Ê
AÊ
TheÊdepositÊofÊ£2,000ÊisÊ probablyÊaÊreservationÊfeeÊyouÊ paidÊtoÊtheÊsellingÊagentÊwhenÊ
you reserved the house. On exchange ofÊcontracts,ÊitÊisÊnormalÊtoÊpayÊaÊ10Ê perÊcentÊdepositÊunderÊtheÊstandardÊ conditionsÊofÊsale.ÊOften,ÊaÊsellerÊwillÊ accept on exchange of contracts aÊdepositÊofÊ10ÊperÊcentÊminusÊanyÊ reservationÊfeeÊpaid.ÊHowever,ÊifÊ thereÊisÊaÊtermÊinÊtheÊcontractÊthatÊ theÊreservationÊfeeÊisÊtoÊbeÊtakenÊintoÊ accountÊuponÊcompletion,ÊthenÊyouÊwillÊ haveÊtoÊpayÊaÊdepositÊofÊ10ÊperÊcentÊ of the purchase price on exchange ofÊcontractsÊandÊtheÊreservationÊfeeÊ ofÊ£2,000ÊwillÊbeÊdeductedÊfromÊtheÊ balanceÊofÊpurchaseÊmoniesÊdueÊ whenÊyouÊcompleteÊtheÊpurchaseÊ ofÊtheÊproperty.ÊYouÊshouldÊclarifyÊ thisÊpointÊwithÊyourÊsolicitor.ÊUnderÊ theÊstandardÊconditionsÊofÊsale,ÊaÊ 10ÊperÊcentÊdepositÊisÊheldÊbyÊtheÊ seller’sÊsolicitorÊasÊstakeholder,ÊandÊsoÊ cannotÊbeÊreleasedÊtoÊtheÊsellerÊuntilÊ completion.ÊSomeÊdevelopersÊrequireÊ theÊdepositÊtoÊbeÊpaidÊtoÊtheirÊsolicitorÊ asÊagent,ÊenablingÊitÊtoÊbeÊreleasedÊ toÊtheÊdeveloperÊpriorÊtoÊcompletion.Ê ThisÊisÊrisky,ÊasÊifÊtheÊdeveloperÊfailsÊ toÊcompleteÊorÊbecomesÊinsolvent,Ê getting it back may be difficult. Some buildingÊwarrantiesÊorÊguaranteesÊcoverÊ suchÊaÊriskÊ-ÊaskÊyourÊsolicitor.
Multi-Award Winning Conveyancing 8
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