The following Property Disputes Q&A produced in partnership with Kate Andrews of Hamlins provides comprehensive and up to date legal information covering:
When purchasing property (either freehold or leasehold, residential or commercial), usually a deposit is payable on exchange of contracts, which will be held by the seller’s solicitors as agent or stakeholder. If the deposit is held as agent for the seller, the seller’s solicitors can release the deposit to the seller at any time. This would usually be as soon as it has been paid.
In contrast, where a deposit is held as stakeholder, the stakeholder can only pay the deposit to the person rightfully entitled to it. The money cannot be handed to either party without the consent of the other as the stakeholder is the agent of both parties.
In residential transactions, the Standard Conditions of Sale (Fifth Edition) provides that the deposit will be held as stakeholder, save where the seller is purchasing another property in England and Wales. Similarly for commercial transactions, the Standard Commercial Property Conditions (Second Edition) provides that the deposit is held as stakeholder.
It is assumed, on the basis the deposit is held as stakeholder, that the Standard Conditions are applicable, however the other terms of the contract and any variations to the Standard Conditions ought to be considered. It may be that the contract
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