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30 May 2014 / Alec Samuels
Issue: 7608 / Categories: Features , Property
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The deposit! Don't let this happen to your client

Alec Samuels provides some points of reference for trouble-free conveyancing

In the usual situation the deposit is paid by the purchaser P to the vendor V on the exchange of contracts, and the transaction runs smoothly. Complications may arise where, as a term of the contract, V (or P) has to obtain planning permission or V has to build the flat and make it ready for occupation. When the planning permission will be issued is uncertain until it happens; when the flat will be ready is uncertain until it happens. The deposit was to be paid 60 days after planning permission was obtained. Planning permission was obtained. V then served a five-day notice making time of the essence and requiring payment of the deposit. P did not pay.

The Court of Appeal held that as a matter of law the payment of the deposit is a condition of the contract, a fundamental term. The five-day notice was fair and reasonable, and made time of the essence. Failure by P to

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