If you're buying a home, you may have agreed on terms with the seller, and much of the process is in hand. However, it's taking a little longer than you might have hoped, and out of the blue, you've had a request from the seller to see if you will allow them to access your 10% deposit. Is this normal, and what should you do about it?
You may have received what is known as a Section 27 request. In certain circumstances, this will allow the seller to access the deposit before settlement day, but they must receive your permission before they can proceed.
People need access to money for a variety of different reasons, but it's important for you to understand the motivation here. You don't want to put pressure on the potential contract by releasing this money early, and in certain circumstances, you may even want to think about backing out.
Questions to Ask
Could it be that the buyer is still struggling to close the existing mortgage on the property and may even need access to the deposit to help them do so? This should give you cause for concern, and if this is the case, then you should probably decline their request.
Getting More Details
Before you agree, you need further confirmation. You want to be sure that there is no impediment that could cause an issue with the title transfer. Furthermore, they should provide you with notice that the existing mortgage has been settled. All of this should be contained within a statement attached to the Section 27 request, and you should run it past your property conveyancing consultant first to get their opinion.
Typically, the deposit is held on trust by an independent third party, and they will only release it if both the seller and the buyer sign an early release of deposit authority.
Action Is Needed
However, note that you will have to respond to a Section 27 statement within a month of its receipt with your decision, one way or another. If you agree and have no issues, then the earlier you sign it, the earlier that deposit can be released to the seller. If you don't agree, then you will need to give your reasons and give the seller the opportunity to address them if possible. Be careful here because if you don't respond within 28 days of receiving the request, then the law will assume that you give your consent and the seller will indeed be able to access your deposit.
If you're unsure about the content of this document or need more advice, get in touch with your conveyancer as soon as possible.