• Reverse Deposit

    By Guest on 10th Sep 2014

    what is reverse deposit when buying a house

  • 2 Answers

    By Guest on 21/09/2014

    There is no such thing as a "reverse deposit". I can only think that you are referring to a "reverse release". During the process of exchanging contracts, where there is more than 1 property in the chain, a system has developed to ensure that contracts are either exchanged on all of the properties or none, to avoid someone being left for example having exchanged contracts to purchase a property for which they are relying on the proceeds of a sale of their current property, only to find that they do not exchange on the sale.

    The system involves the solicitor acting for the buyer at the start of the chain "giving a release" of the contract to the solicitor acting for the seller of that property. This means he is agreeing that provided the seller's solicitor contacts him prior to an agreed time (which must be later the same day) he will complete the exchange with him. The seller's solicitor can then go ahead and exchange contracts on his client's connected purchase (or if necessary give a release himself) knowing that provided he does so before the deadline he will be able to exchange on his sale.

    It is usual to start at the bottom because that is where the deposit, which will travel up the chain, starts from however sometimes, usually because there is pressure to get exchanged that day and the solicitor at the bottom isn't quite ready but expects to be later that day (for example after his client transfers the deposit or drops off some signed papers) the exchange will start from the top, in which case the initial release of the contract is known as a "reverse release".

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