• Selling A House And Purchasing

    By Guest on 23rd Sep 2014

    I am currently in a situation where I am selling the third house in a chain. I am also purchasing the 1st house in the chain. I want to fund the purchase of the first house (deposit) with the sale of my house (3rd in the chain). I have been advised that I can not do this as the money needs to be available for the first house before it works its way up the chain. I thought that it could all be done on the same day and I would be able to use the money from my sale to fund the deposit of the first house. I would ideally like as second opinion as to wether or not this is correct. I have spoken to my financial advisor and estate agents and they seem to think that this is perfectly plausible but my solicitor has obviously a different view on it.

    I look forward to hearing from you.

    Kind regards


  • 1 Answers

    By Guest on 23/09/2014


    The way you describe the chain doesn't exactly make sense but from what I can gather, you are person A, you are buying from person B who is in turn buying from you. Is that correct? Is so there is what's sometimes called a "circular chain". If this is the case your solicitor is right. In a normal chain, the buyer at the bottom (who is not selling) pays a deposit to his seller and it travels up the chain til it reaches the seller at the top who is not buying (and so does not need to pass a deposit on). in your case this won't work. You want to use the deposit from your sale on your purchase but where will your buyer get the deposit from? Let's call you A, your seller B and his seller (and your buyer) C. C gets his deposit from B, who gets his deposit from A (you).

    In this situation all you can do is exchange and complete on the same day, thus negating the need for a deposit. Alternatively, you all agree to exchange on nil deposit, though as this decreases the risk of any one party suffering loss in the event of default, it inevitably increases the risk of default.

    Hope this helps but do comment if would like further clarification.

  • Post Your Answer

  • Do you want to be informed of further comments / replies? Yes No

Ask a Question