Deposit on property sale.

[Mazoka]

Can anyone tell me the answer to this question.

A purchase price on a property is agreed between the vendor and a potential buyer. A deposit is then lodged with the estate agent who is handling the sale in order to take the property off the market. The property is taken off the market but the potential buyer decides not to proceed with the purchase. Does the agent take a percentage of the deposit as payment for their work up to that point. If they do, what would be the usual percentage that they would take. 

[Janet]

Usual percentage =100 .....

If the buyer is lucky s/he'll get it all back, rather less lucky a percentage that it's impossible to put a figure on ... but I've known many agents keep the lot in such circumstances.

It would be slightly different if the vendor pulled out, but if the buyer, then they could (and often do, and can expect to) lose the lot.

[Mazoka]

Thank you for your reply Janet.

To clarify the situation. I am the vendor of the property, I have been informed today that a potential buyer has put in a offer for the property, to which I have agreed. The estate agent has told that they will be requesting a deposit of 3000 euros to take the property off the market. The buyer is returning to the UK tomorrow, he has said that he needs to get the purchase price together as soon as he can.

Does this 3000 euro deposit mean that the vendor and the buyer are legally bound in some way to honour the sale. And if so, given that the buyer backs out of the process should not the vendor be entitled to part, if not all the deposit?

[Pelinor]

We have always been told that if the buyer backs out they forfeit the entire deposit and it goes to the vendor. 3,000 seems on the low side. The figure we have always been told and used is 6,000 what used to be a million pesetas. But that may well be just custom?

[Janet]

I suspect that the 3,000 is just a holding deposit (to take the property off the market, as they put it) until the remainder of the usual 10% is paid. Having said that, I've known plenty of sales lately where no deposit changes hands at all and they proceed straight to notary. This is actually what I now routinely advise because of the risk of an agent going bust while holding a deposit.

It is routinely understood that a buyer loses the entire deposit if s/he backs out of a purchase, though only last week I became aware of one agent returning the lot to such a buyer. Assuming it doesn't get returned to the buyer, however, then yes, in theory, it should go to the vendor ... but I'm not aware of that happening too often ...

M, as far as being legally bound is concerned, that legal bind is applicable from the moment in which the sale is agreed, deposit or not.

[Mazoka]

You are right on all counts Janet.

I've spoken with a lawyer in Tenerife today concerning the possibility of a legal obligation by accepting the 3000 euro deposit. A legal obligation would come into effect only if I had signed a private contract with the buyer which included such things as accepting a 10% deposit, agreeing to a completion date then failing to honour the specified date etc.

As far as the 3000 euro deposit being forfeited by the buyer because of their possible failure to proceed any further, the deposit "should belong to the vendor." The lawyer went on to say that some estate agents have been known to act very unfairly to both vendor and buyer concerning holding deposits.

[Janet]

You are right on all counts Janet.

I've been accused of "always needing to be right". Sad fact is, I usually am ...