Sale Deposit

[pissouri123]

Hi
I am going to sell my property soon. I understand that it is normal for the buyer to put down a deposit once their offer has been accepted. How much is the sum normally? Is this deposit binding i.e. if the buyer backs out, do they get their full deposit back? I ask because people have given me conflicting information!
Thank you

[Nigel Howarth]

Hi

If your buyer has any sense their lawyer will make sure that there is something in writing that states much deposit was paid, the circumstances in which it will be refunded and that it will come off the full purchase price for the property.

If your buyer pulls out of the deal it's possible that any deposit they paid will go towards paying their legal fees.

There is no set amount - I've head of people paying 10% and others 30%.

Regards,

[pissouri123]

Thank you for your prompt reply.

[Pantheman]

It's not a deposit as such, it is a reservation fee to remove the property from sale pending the paperwork.

As for reservation agreements, whatever Nigel said.

As for amount, it is normal for reservation fees to be €3k - €5k.

Depends also on the sale price, I mean if you were selling a €1mn house would you accept 5k, most probably 10k+.

[pissouri123]

HI
Thank you for your reply, Pantheman. I understand now that it is actually a reservation fee.

It is that an acquaintance who wishes to buy my house so no agent. Hence, who would this reservation fee be paid to? This acquaintance cannot start the sale process until December (needs to sell in UK first) but I am happy to have agreed a price and wait, However, they want to put down what they term as a deposit or have some sort of written agreement. Can you or Nigel (or anyone else) advise please as to what can or cannot be done.

Thank you

[Pantheman]

HI
Thank you for your reply, Pantheman. I understand now that it is actually a reservation fee.

It is that an acquaintance who wishes to buy my house so no agent. Hence, who would this reservation fee be paid to? This acquaintance cannot start the sale process until December (needs to sell in UK first) but I am happy to have agreed a price and wait, However, they want to put down what they term as a deposit or have some sort of written agreement. Can you or Nigel (or anyone else) advise please as to what can or cannot be done.

Thank you

There are no hard and fast rules on this, it is whatever you both agree to.

The reservation fee will go to you, usually non-refundable if he pulls out. If he needs to sell first, how long are you prepared to wait?

I suggest, you put some future date in there, whereby he needs to have the capital to begin the sale process, otherwise you could go on forever and you cannot then sell elsewhere.

If you are based in Cyprus, may I suggest you get a lawyer to draw up this agreement, so that it becomes official.

The contents of this agreement is then up to both of you.

Hope that helps

[pissouri123]

Than you for your informative response. Things are a clearer for me now, I understand the need for a timescale.

If they give me a reservation fee, you mention that I cannot sell elsewhere. However, does this mean that if my circumstances unfortunately changed, I cannot cancel the sale (before contracts are exchanged) and return their deposit? I only ask as I want to fully understand.

Thank you

[Pantheman]

Than you for your informative response. Things are a clearer for me now, I understand the need for a timescale.

If they give me a reservation fee, you mention that I cannot sell elsewhere. However, does this mean that if my circumstances unfortunately changed, I cannot cancel the sale (before contracts are exchanged) and return their deposit? I only ask as I want to fully understand.

Thank you

Nothing is impossible, and as I said it depends on the agreement. You are taking his deposit on the understanding you will wait and commit to this, hence the future date I mentioned. After all, if he gave the deposit and asked for it back in a month, I doubt you'll be happy about that.

If you think your circumstances might change, then don't commit, you can try selling the property and when your friend is ready to buy, if it is available then he can buy it, if not then ' hard luck'. This way you have the options open to you, the downside is, by then he may have changed his mind or found something else.

You did say you didn't mind waiting! How long is the question?

[pissouri123]

I will have a chat with them now that I am armed with info (thanks to you) and see if we can find an agreeable solution.

Thanks again for all your help.

[Cyprus2023]

Hi, I am new and don't know if I'm in the right place
I made an offer on a property in Cyprus 3 weeks ago. The pre sale agreement was drawn up, I paid the required deposit and signed the agreement. 5 days later the vendor informed the estate agent he had taken a higher offer. I thought a pre agreement stopped you being gazumped in Cyprus. is what has happened legal? The agent says it is

[Nigel Howarth]

Hi Cyprus2023 and welcome to the forum.

The pre-agreement only takes the property off the market. It doesn't stop someone else offering more.

Regards

[Cyprus2023]

Thank you for your quick reply. What is the point of reservation fee if he /she still accepts offers elsewhere. I thought it secured the property for 30 days. If I pulled out I would lose the deposit, yet he can pull out and I get left with the bill for the surveyor?

[Pantheman]

Thank you for your quick reply. What is the point of reservation fee if he /she still accepts offers elsewhere. I thought it secured the property for 30 days. If I pulled out I would lose the deposit, yet he can pull out and I get left with the bill for the surveyor?

The pre-sales agreement, should state that the vendor will not show or offer the property to anyone else and to remove it from sale.

If it contains such a clause then they are in breach of contract. What does your agent have to say about this??

And yes, there should also be an equal burden on vendors, they should not be able to pull out so easily without loss.

[Cyprus2023]

Thank you for you reply. Yes there is such a clause, but the property was still being advertised by 3 other agents after this was signed and deposit paid. Currently the agent is ignoring me.

[Cyprus2023]

ok, so the agent has now refunded my deposit and wants to wash their hands of the matter ,but vendor will not pay compensation for pulling out.