Western Mail Property Doctor Column #16
By admin
Issued on behalf of Emyr Pierce Solicitors
I have been asked to provide a deposit of 10% on exchange of contracts. Why have I been asked to do so?
In law, a deposit is unnecessary and neither common law nor statute demands that one is payable. However, you will find that all sale contracts contain a requirement for a deposit paid on exchange of contract and Standard Conditions of Sale (SCS) provide for a deposit of 10% of the purchase price – expressly for the benefit of the seller.
In recent years, deposits of less that 10% have become more widespread in residential transactions. This is due partly to the rise in the number of 95% and 100% mortgages being taken out and also, increased property prices leading to high deposits that place an unfair financial burden on the purchaser while at the same time overcompensating the seller, who may then forfeit said deposit should the buyer default for any reason.
In practice, deposits are rarely handed over as there’s insufficient time between exchange of contract and completion, and it’s more common these days for a solicitor to ‘hold’ the deposit to the order of the seller’s solicitor.
The relevance of a deposit is that in the event of a buyer failing to complete on agreed date for whatever reason and failing to comply with the requirements to complete no later than 14 days thereafter, in compliance with a Notification to Complete (NCT), the seller can forfeit the deposit by way of compensation.
As mentioned, deposits of 10% are becoming less common and whatever deposit coming up the chain is usually deemed acceptable. The risk with this is to those at the top of the chain should the sale fall through and in this way, a seller’s solicitor will explain the consequences of taking a reduced deposit on calculation of the likely amount of loss that would be suffered – costs of bridging finance or interest if making another purchase, time delay or resale, for example.
I’ve been occupying a piece of land at the bottom of my garden as part of my garden for the last 8 years. Can I claim title to it?
In terms of unregistered land, the Limitation Act 1980 continues to apply in relation to adverse possession.
In this way, a person who claims to be in adverse possession of unregistered land can apply to the land registry for what’s know as first registration, on the basis that the documentary title owner is barred from obtaining possession – under section 15 Limitation Act 1980.
Any application has to be accompanied by a statutory declaration that provides proof of adverse occupation for a minimum of twelve years.
The provisions of Limitation Act 1980 do not apply to registered land. Provisions relating to the registration of an adverse possession of registered land are to be found in Schedule 6 Land Registration Act 2002. A squatter on registered land will be entitled to make an application if he can prove adverse possession for a minimum of ten years.
If sufficient evidence exists, notice will be served on the owner, chargee and any other interested parties. If this happens, whoever’s in receipt of the notice has several options.
They can, if they choose, take no notice and, in this instance, the applicant will be registered as the owner of the registered title. They can object – primarily to the strength of evidence proving the applicant has been in adverse possession for a period in excess of ten years – this will then be resolved judicially if no agreement is reached. Or, a counter notice can be served, requesting that the matter be resolved under Schedule 6 of the Act.
