57. Deposit.

Although there is no requirement in law for a buyer to pay a deposit, it is customary for a deposit to be paid and most contracts will include provision for payment of ten per cent of the purchase price to be payable on exchange of contracts1.

This payment acts both as a part payment of the purchase price and as a demonstration to the seller of the buyer's intention to complete the contract in default of which the seller may usually forfeit the deposit2.

There is no requirement in law for a buyer to pay a preliminary deposit prior to exchange of contracts. If such a deposit has been paid, for example to an estate agent or to the developer of a new property, the terms under which the deposit has been paid should be checked to ascertain whether the deposit is refundable to the buyer if the transaction