buyers beware

[lw395]

Selling privately, if a buyer wanted to pay all the costs and get a reputable surveyor before paying a deposit, I might agree to that, maybe with safeguards, like me being present during survey.
As it is I sold through a broker and let him deal with it.
You could always credit check the broker.
Accepting the deposit is an agreement not to sell to anyone else. So the survey cost is not at risk from gazumping.
The comaprison with buying houses is of limited value, as surveys are often valuations and buyers need the right to pull out if the build soc doesn't value it highly enough.

[Observer]

[ QUOTE ]
I hope if you have read the posts that you now have a clearer undestanding of the law and the processes. Brokers do not have legal access to client accounts. Deposits to dealers who are selling on their own account are very different as you are then governed by consumer law which is different from contract law. Paying by credit card gives you additional protection should the dealer fail to deliver. However when the same person is acting as a broker that consumer type protection does not exist - simply because the broker is not delivering any goods or services to you.

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A broker who has operates a client account does (almost certainly) have "legal access" to the money in it. It just doesn't belong to him. However, he can misappropriate it in exactly the samw way that a solicitor can misappropriate clent account funds. However, in the latter case, there are very serious professional consequences and (I believe) an insurance scheme (although I'm not sure what if any limits there are on it).

[Tranona]

Don't know where you get the idea that they (client accounts) are prone to abuse. Please can you give examples except for the very complex Opal case.

You oversimplify the process if it is done on trust between the two parties - fine if it goes OK but not if it goes wrong.

If a contract is in place then both parties know what their rights and obligations are. The costs of the survey, haul out etc are the same, as the buyer still needs to satisfy himself that the boat is as described by the seller, so no difference there. What a contract does is provide the framework for what happens if the survey reveals faults. I cannot understand why there are legal fees needed to recover a deposit if the sale fell through because the two parties were unable to agree a new price reflecting the difference in condition and therefore value as revealed by the survey.

My example is mainly about the surveyor failing, however it is also to illustrate the sort of circumstances where (if the survey had been done properly) the buyer could walk away and have his deposit back.

[jb2008]

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Accepting the deposit is an agreement not to sell to anyone else. So the survey cost is not at risk from gazumping.

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10% of the price seems a heck of a risk to lay out to prevent gazumping, but obviously that's a decision for the buyer to make.

The counter to that argument is that it's in the interests of the seller not to have a contract as well. Which makes the no contract, no sale position even more strange.

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The comaprison with buying houses is of limited value, as surveys are often valuations and buyers need the right to pull out if the build soc doesn't value it highly enough.

[/ QUOTE ]
Some people still have to use loans and banks still want to know that the collateral is worth what you say. As do the insurers.

I guess the essence of this is, when does the deposit not get returned and who gets it?

[sailorman]

Correct & i dont get pissed about [img]/forums/images/graemlins/wink.gif[/img]

[jb2008]

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Don't know where you get the idea that they (client accounts) are prone to abuse. Please can you give examples except for the very complex Opal case.

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I was considering the examples given above, if you discount those then fair enough however you must accept that leaving a large sum in somebody else's hands is a risk? I think it's just our assessments of the risk that differ.

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If a contract is in place then both parties know what their rights and obligations are. The costs of the survey, haul out etc are the same, as the buyer still needs to satisfy himself that the boat is as described by the seller, so no difference there. What a contract does is provide the framework for what happens if the survey reveals faults.

[/ QUOTE ]
That's an argument for a contract not a deposit, admittedly, I should have said that rather than "contract" above.

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I cannot understand why there are legal fees needed to recover a deposit if the sale fell through because the two parties were unable to agree a new price reflecting the difference in condition and therefore value as revealed by the survey.

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Because recovery of the deposit is often harder than the initial payment of the deposit. It's pretty naive to think otherwise regardless of legality.

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My example is mainly about the surveyor failing, however it is also to illustrate the sort of circumstances where (if the survey had been done properly) the buyer could walk away and have his deposit back.

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But with no deposit, the buyer could still walk away. In fact the buyer could walk away more easily, if following the bad survey the broker or the seller disagreed our buyer will have a hard time recovering his deposit at all.

[Tranona]

The answer to your last question is very simple. The deposit is not required to be returned if the buyer fails to meet his obligations under the contract. So for example if the contract was subject to satisfactory survey and the survey was satisfactory but the buyer simply changed his mind then the seller would be entitled to keep the deposit. Whether he actually would depends on his attitude and how much he thinks he has lost through the actions of the defaulting buyer.

[Observer]

[ QUOTE ]
Don't know where you get the idea that they (client accounts) are prone to abuse. Please can you give examples except for the very complex Opal case.


[/ QUOTE ]

A client account is open to abuse. Whether the extent of actual abuse that has occurred satisfies a subjective definition of "prone to abuse" is academic. The security of the funds in a cleint account relies entirely on the integrity of the person(s) operating it.

To be honest, in these difficult economic conditions I would think very carefully, as buyer or seller, before agreeing payment of a substantial amount to any broker's client account unless I had actual control, as a joint signatory, of movements of money from the account.

As buyer or seller, I would be more likely to suggest that a separate, special purpose account is opened in the name of one or the other of buyer or seller and that both should be signatories to the account with "two signatures required" on the mandate.

[jb2008]

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So for example if the contract was subject to satisfactory survey

[/ QUOTE ] A survey will always produce some issue, so presumably could always be argued to be "unsatisfactory" and thus the deposit will always be returned. So why take it in the first place?

If it's solely the buyers satisfaction, he can simply declare he is unsatisfied (regardless of the survey results), if the seller gets to argue the point then it could end up in court.

[sailorman]

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