Question

1. to whom is the deposit payable and does it have to be paid by bank cheque? since we arewaiting for some funds to arrive from singapore, would there be any problems if we delayedpayment of the deposit until a few days after the actual date of exchange of the contracts?

Answer 1

The deposit for a property exchange is usually paid by bank cheque to the seller or agent. Delays in payment must be communicated with the seller, as the deposit is a demand deposit that should be accessible. Other saving options like CDs might not be suitable due to penalties for early withdrawal.

Step-by-step explanation:

The deposit for the exchange of contracts is typically payable to the seller or their real estate agent, and the preferred method of payment can vary, however, a bank cheque is often required due to its secure nature. In situations where funds are delayed, such as waiting for money from an overseas account like Singapore, it's crucial to communicate this with the seller. Delays in the payment of the deposit could potentially cause problems unless there's an agreement with the seller or their agent..

It is critical to understand that the deposit is often considered a demand deposit, which would typically be a checkable deposit at a depository institution that is readily available to make a cash withdrawal or to write a cheque. If a buyer chooses to diversify their funds, they should ensure that the deposit is readily accessible to meet contractual obligations, or they may risk contract cancellation or other repercussions.

Moreover, buyers may consider various savings vehicles, like a Certificate of Deposit (CD), which often demand a lump sum to be held for a set period with the promise of a higher interest rate. However, early withdrawal from a CD can result in substantial penalties, so it may not be suitable if the funds are needed imminently for a deposit payment.