Is contracts exchange deposit refundable?

someday2010

Is the 10% deposit payable at contracts exchange refundable if for whatever reason there is an issue at mortgage drawdown and the bank pulled out of issuing the mortgage?

someday2010

someday2010 wrote: »

Is the 10% deposit payable at contracts exchange refundable if for whatever reason there is an issue at mortgage drawdown and the bank pulled out of issuing the mortgage?

You really should be asking your solicitor this. If the contract had a contingency that it was subject to mortgage approval, then you may get your money back. But if there is no contingency, you have signed a binding contract to buy a property and the seller may hold you to this, but may accept your deposit as compensation for you pulling out. Remember, at this stage the seller owes his/her solicitor quite a bit of money for preparing the documents/contracts for sale.

DirkVoodoo

Oh yeah, contact solicitor immediately!

I asked when we were signing what were to happen if we changed our minds, purely from a hypothetical standpoint as we were all in at that stage, and I was told rather succinctly that we would lose the deposit and potentially be sued for breach of contract.

I really don't see how you would have been allowed proceed without approval though! It's a big gamble.

someday2010

This is more hypothetical and I was looking at it from the point of view of the mortgage. Obviously, the bank would have made the formal loan offer, but you do read on here about last minute issues at drawdown stage involving insurances and payslips etc.

charlietheminxx

someday2010 wrote: »

This is more hypothetical and I was looking at it from the point of view of the mortgage. Obviously, the bank would have made the formal loan offer, but you do read on here about last minute issues at drawdown stage involving insurances and payslips etc.

Make sure that there is a "subject to loan" clause in your contract. A good solicitor should put this in place anyway.

3DataModem

charlietheminxx wrote: »

Make sure that there is a "subject to loan" clause in your contract. A good solicitor should put this in place anyway.

A good seller's solicitor should refuse to do this.

A good buyer's solicitor should not allow you to sign purchase contracts until they have sight of full loan pack (although reading the OP, it seems they have full approval but something impacted drawdown).

In the case where something impacts drawdown AFTER approval, then the buyer of course can be sued, but usually will happily negotiate to keep the 10% deposit (and maybe a little more, depending on the circumstance).

someday2010

As I said, this is hypothetical and I am naturally a pessimist.. so I was just trying to understand what could go wrong between signing the contract on the basis of a full loan offer and handing over 10% deposit and drawing down the mortgage. The main items I see on here are issues with life insurance and people changing jobs.

But thanks for the advice on subject to loan, that seems sensible and reasonable.

Dolbhad

someday2010 wrote: »

As I said, this is hypothetical and I am naturally a pessimist.. so I was just trying to understand what could go wrong between signing the contract on the basis of a full loan offer and handing over 10% deposit and drawing down the mortgage. The main items I see on here are issues with life insurance and people changing jobs.

But thanks for the advice on subject to loan, that seems sensible and reasonable.

It depends on house your house buying. New builds you could be signing a contract and house is not ready for a year. Something could happen. You could change jobs or lose a job. Could be an issue with life or house insurance. Or market could drop. It seems during the boom the subject to loan clause wasn’t a thing but then narkwy dropped and people lost the deposit. Also builders went bust. A good solicitor will have a loan clause in there to protect you and also ensure the money is being held by the sellers solicitor on trust.

GingerLily

charlietheminxx wrote: »

Make sure that there is a "subject to loan" clause in your contract. A good solicitor should put this in place anyway.

*new builds
A lot of developers solicitors will not allow this clause, it is what it is, we tried to fight to add it but when there's a queue of buyers then they can just offer your property to the next person on the list.

el Fenomeno

Our solicitor told us that the law society of Ireland have recommended this be put into all contracts, but I guess it's just a recommendation. Our original contract didn't have it, but when we requested it they put it in straight away.

Dolbhad

GingerLily wrote: »

*new builds
A lot of developers solicitors will not allow this clause, it is what it is, we tried to fight to add it but when there's a queue of buyers then they can just offer your property to the next person on the list.

It’s more an issue in Dublin. Our solicitor said in Cork once it’s asked to be put in they never had an issue. Solicitor said in Dublin they have been very opposed to it but has gotten it in - but has taken a lot of going back and forth for it. And basically tells people not to proceed without it. Law society does recommend it go in so I do think if your a solicitor for a builder you should insist they allow it in. Law society even have the condition you put in so it’s all uniformed.

Also a new thing that deposit gets released to builder immediately which I think shouldn’t be the case either.

happyfriday74

e in Dublin. Our solicitor said in Cork once it’s asked to be put in they never had an issue. Solicitor said in Dublin they have been very opposed to it but has gotten it in - but has taken a lot of going back and forth for it. And basically tells people not to proceed without it. Law society does recommend it go in so I do think if your a solicitor for a builder you should insist they allow it in. Law society even have the condition you put in so it’s all uniformed.

I tried to get this put in when I bought and we were told tough luck by the seller. Thankfully it worked out in the end. Our Solicitor told me a fair few vendors were not keen on a buyer inserting this either.

GingerLily

happyfriday74 wrote: »

I tried to get this put in when I bought and we were told tough luck by the seller. Thankfully it worked out in the end. Our Solicitor told me a fair few vendors were not keen on a buyer inserting this either.

That was our experience too, my solicitor was a good friend and she was very hesitant to advise us to proceed without knowing the gamble we were taking.

I just want posters to understand that it doesn't mean the buyers solicitor is doing bad job if they don't get it included.

Dolbhad

GingerLily wrote: »

That was our experience too, my solicitor was a good friend and she was very hesitant to advise us to proceed without knowing the gamble we were taking.

I just want posters to understand that it doesn't mean the buyers solicitor is doing bad job if they don't get it included.

I agree. I don’t think it’s a sign of a bad solicitor if they don’t get the clause in. After all it needs to be agreed by both parties. Just seems very frustrating for purchasers that it just seems to depend on who you buy off and where. Mostly in Cork it’s not an issue but in Dublin it’s very common. I remember Irish times (I think) ran an article about it actually and the issue of having to sign within 21 days for white goods. Since law society recommend it I would have hoped their solicitors would just tell them it’s reasonable to put in. Haven’t heard of it being an issue for second hand sales...

MSVforever

We bought a new built house in Dublin this year. There was no issue with adding the subject to loan clause in the contract. In fact our solicitor was advising us not to sign the contract otherwise. All of our neighbours had the clause included as well.

c6ysaphjvqw41k

I wouldn't sign without it. I'm currently looking for houses at the minute and I'm going to insist its included. I have a chronic illness and a lot of insurance companies will refuse mortgage protection to someone with it even if their illness is very minor. I've read a lot about people getting high premiums with it, or no cover at all and having to look for a waiver if the bank will accept one.
If the seller wont accept the clause, I'll walk away. There are other houses.

Marc Big Plan

Marc Big Plan wrote: »

I wouldn't sign without it. I'm currently looking for houses at the minute and I'm going to insist its included. I have a chronic illness and a lot of insurance companies will refuse mortgage protection to someone with it even if their illness is very minor. I've read a lot about people getting high premiums with it, or no cover at all and having to look for a waiver if the bank will accept one.
If the seller wont accept the clause, I'll walk away. There are other houses.

As it is not a legal requirement that the clause be included, and the risk is on the sellers side if it is added to the contract, I really can’t see the benefit to the seller of agreeing to it. I could see the benefit if properties were plentiful and buyers few, but that is not the case right now.

You should not bid on a house unless you are certain you can finance your bid, be that with cash or borrowings. I’d have to say Marc Big Plan, if you insisted on the clause being inserted, I would be concerned that you cannot complete the sale and given the costs involved on the sellers side if a sale does not complete after contracts are signed, you should suffer a financial loss if you cannot afford the house.

For that reason, if the seller doesn’t like the vibe, they may be more than happy for you to walk before contracts are signed. Another buyer is likely to come along.

c6ysaphjvqw41k

Dav010 wrote: »

You should not bid on a house unless you are certain you can finance your bid, be that with cash or borrowings. I’d have to say Lorenna, if you insisted on the clause being inserted, I would be concerned that you cannot complete the sale and given the costs involved on the sellers side if a sale does not complete after contracts are signed, you should suffer a financial loss if you cannot afford the house.

For that reason, if the seller doesn’t like the vibe, they may be more than happy for you to walk before contracts are signed. Another buyer is likely to come along.

I have the same certainty as anyone else. A lot of people don't even know they have something wrong or that they might have an issue till they go to get insurance and have to have tests and end up having issues getting insurance because of health reasons. Doesn't mean they should never be able to buy a house.
I wouldn't be unreasonable, I'd be happy to insert the clause with us paying any of their fees. If they want to find another buyer as I already said
that's fine. It might not be a legal requirement but the law society suggests it should be inserted.

happyfriday74

I don’t think it’s a sign of a bad solicitor if they don’t get the clause in.

Absolutely not. All the solicitor can do in the event of this happening is advise you not to sign and of or the risks associated with what could happen if you do and something goes wrong.

Our solicitor advised us that the sellers wouldn't accept this clause and I still weighed it up and took a punt and I got on fine.

Thats also why cash purchasers are higher in the pecking order of preferred buyers than those with mortgages.

Dolbhad

happyfriday74 wrote: »

Absolutely not. All the solicitor can do in the event of this happening is advise you not to sign and of or the risks associated with what could happen if you do and something goes wrong.

Our solicitor advised us that the sellers wouldn't accept this clause and I still weighed it up and took a punt and I got on fine.

Thats also why cash purchasers are higher in the pecking order of preferred buyers than those with mortgages.

That’s really it. Your solicitor should at least try get it in. If not, then you need to assess the risk. A solicitor will cover themselves and advise to be cautious about proceeding. I personally don’t think I would proceed without it if it was a new build and my completion date is a good few months away - I don’t know what would happen even though I’d expect no change. Our new build contracts as a few get out of jail cards for the builder themselves so would have been annoyed they cover their arses but won’t allow us cover ours.

However the bifilar agreed that the solicitor would hold the deposit as stakeholder and not realease it to builder which I think is very important to make sure is in contracts. I’ve friends buying new build in Musbter. Deposit released to builder - sale agreed over a year ago and no works have even started yet.

MSVforever

Marc Big Plan wrote: »

I have the same certainty as anyone else. A lot of people don't even know they have something wrong or that they might have an issue till they go to get insurance and have to have tests and end up having issues getting insurance because of health reasons. Doesn't mean they should never be able to buy a house.
I wouldn't be unreasonable, I'd be happy to insert the clause with us paying any of their fees. If they want to find another buyer as I already said
that's fine. It might not be a legal requirement but the law society suggests it should be inserted.

+1
You can never be 100% sure.
We bought a new built and we moved in 1 year after paying the booking deposit as the builder kept delaying the completion process.
Finances and health were all in order.

However fast forward a couple of month and I developed some health issues (cancer ). No insurance company was touching me and I had to apply for a waiver with the bank (as mortgage protection insurance is compulsory ).
I was lucky that a) after 6 weeks of back and forth our bank granted the waiver and b) the cancer was fully removed after surgery.

These things are unpredictable and therefore I wouldn't advise to sign a contract without the clause.

someday2010

How long does it typically take to go from signing contracts to drawdown?

Dolbhad

someday2010 wrote: »

How long does it typically take to go from signing contracts to drawdown?

How long is a piece of string? I think it really depends on the parties involved. Is it a new build or second? New build will depend on paperwork and snags being all in order. Second hand will depend on the sellers being ready to move out. Depends on how quick your bank can have everything in order to issue funds. Depends on you having everything in place with the bank to have funds issued. And lastly the competency of solicitors involved. I think most contracts would have a closing date of 2 weeks or 1 week from signing contracts but that’s aspirational and not set in stone. If one of the above is not in order it won’t close.