If a buyer breaches before completion, who is typically entitled to keep the buyer's deposit?

If a buyer breaches before completion, who is typically entitled to keep the buyer's deposit?

• A. The buyer
• B. The lender
• C. The estate agent
• D. The vendor

Answer: (D)

The deposit is security for performance in a property deal. If the buyer pulls out after exchange but before completion, the seller is typically entitled to keep the deposit as compensation for the breach. This is usually set out in the contract as a forfeiture or liquidated damages clause, recognizing the costs and losses the seller incurs from the buyer failing to complete and from the property being taken off the market for longer. The deposit is normally held in trust by the seller’s solicitor or conveyancer until completion and, on the buyer’s default, can be retained by the seller to cover those losses. The lender or estate agent aren’t in the position to keep the deposit in this scenario. If the breach is not the buyer’s fault or if there are different contractual terms, the outcome can vary, but the typical position is that the vendor keeps the deposit.

The deposit is security for performance in a property deal. If the buyer pulls out after exchange but before completion, the seller is typically entitled to keep the deposit as compensation for the breach. This is usually set out in the contract as a forfeiture or liquidated damages clause, recognizing the costs and losses the seller incurs from the buyer failing to complete and from the property being taken off the market for longer. The deposit is normally held in trust by the seller’s solicitor or conveyancer until completion and, on the buyer’s default, can be retained by the seller to cover those losses. The lender or estate agent aren’t in the position to keep the deposit in this scenario. If the breach is not the buyer’s fault or if there are different contractual terms, the outcome can vary, but the typical position is that the vendor keeps the deposit.