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Old 17.05.2017, 18:21
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House purchase: normal deposit amount, who holds it?

A few more questions coming up as we approach signing our 'right to purchase' agreement for a house.

Our (swiss) lawyer wrote up a contract which indicated a 10% deposit which would be held in escrow until the purchase completes and we take possession.

Our (swiss) vendor says this is unusual and the deposit should be paid immediately to the vendor.

What are people's experiences? Also what are normal percent deposits for 'right to purchase' (diritto di compera) contracts?

Thanking you in advance for your help,
Michael
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Old 17.05.2017, 18:39
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Re: House purchase: normal deposit amount, who holds it?

We had to pay little less than 5% deposit to reserve the house. The seller(agent) was an insurance company and the account where the money was to be deposited was mentioned in the reservation agreement. We had a clause in the agreement describing what would happen if the deal did not happen.

As we understood, the amount remained with the insurance company till the sale was finalized.
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Old 17.05.2017, 18:49
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Re: House purchase: normal deposit amount, who holds it?

I don't think people usually do escrow, but it's not a bad idea. Next best thing would be to pay to the legal owner of the land. If you pay to a third party, such as his real estate agent, there's a risk they'll go bankrupt and won't have anything to pay back to anyone. The owner at least has his land and he's liable with it for his debts. Of course, his mortgage bank would have a right to take the first cut of the property.

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We had to pay little less than 5% deposit to reserve the house. The seller(agent) was an insurance company and the account where the money was to be deposited was mentioned in the reservation agreement. We had a clause in the agreement describing what would happen if the deal did not happen.
Unless the reservation agreement was notarized, legally it's rubbish. Contracts, pre-contracts relating to real estate purchases are void unless notarized, it's law
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Old 17.05.2017, 19:10
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Re: House purchase: normal deposit amount, who holds it?

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I don't think people usually do escrow, but it's not a bad idea.
I guess I'm used to a different system in the UK, where lawyers usually hang on to money until completion, which is why I wasn't surprised when my swiss lawyer proposed the same thing.


"The usual process is that your solicitor will hold, on your behalf, the deposit paid by the buyer. Generally, the Law Society standard conditions of sale, which govern most contracts for the sale of residential property, say that the sellerís solicitor should not part with the deposit until completion."


http://www.homesandproperty.co.uk/pr...ion-30408.html
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Old 17.05.2017, 19:16
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Re: House purchase: normal deposit amount, who holds it?

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Unless the reservation agreement was notarized, legally it's rubbish. Contracts, pre-contracts relating to real estate purchases are void unless notarized, it's law
Good then that its all done for us. Will keep this in mind if there is ever a next time.
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Old 17.05.2017, 19:31
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Re: House purchase: normal deposit amount, who holds it?

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Good then that its all done for us. Will keep this in mind if there is ever a next time.
Most people don't bother notarizing it, that's just how things are in this industry. Just don't have any expectations about it, it's one man's word to another, that's all. The money you can claim back as unjustified enrichment by law if things go south, as long as the other party is able to pay. I wouldn't count on any other rights the agreement might convey to you - legally it's void, doesn't bind anyone.
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