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My solicitor is recommending to speed things along by transferring the funds for a flat I am buying (leasehold, cash-buyer) to the account of the law firm. We are waiting on final costs from the seller's so I may have to pay the difference at a later date.

Is this advisable/normal or very stupid?

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3 Answers 3

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Yes this is fairly normal. Your solicitor is acting on your behalf and will hold the money in a segregated "client account" until the time comes to send it to the vendor, or return it to you if it falls through.

But make very sure you are really transferring to the solicitor and not to a scammer who has sent a fake email or intercepted their email and changed the details. This really happens and is not just a theoretical concern. Call them on a verified phone number to double-check the account details, and follow up very quickly to make sure it's received.

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    Thanks, I double checked with the estate agents who confirmed this is a routine procedure. I also took your advice and ensured all of the details were correct and received instant confirmation from the solicitor that funds were received.
    – Jack Scott
    Dec 17, 2020 at 21:27
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    If you think about it from the seller's perspective they have the same issue as you. Should he sign over the deed to his house before he receives money from you? Escrow accounts were created to solve this issue. Funds are held in escrow by a trusted third party and when the deed is signed over the funds are delivered to the seller. In the U.S. the transfer of the deed is complicated by the fact that debts are often attached to the property and would carry over to you if they are not discharged. Your lawyer which make sure that all debts have been discharged before proceeding.
    – jdeyrup
    Dec 18, 2020 at 23:44
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    @jdeyrup Your comment is about the US system, but this is a UK question which uses a different system. The word "exchanged" is crucial.
    – thelem
    Dec 19, 2020 at 15:05
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    @thelem The description provided in the answer sounds very similar to the system in the US. Regardless if there are some small differences I was explaining why the system is set up the way it is. It is a system that protects both the buyer and the seller and makes a mutually beneficial transaction easier.
    – jdeyrup
    Dec 19, 2020 at 20:54
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In the UK the two key stages of a property sale are exchange and completion.

At exchange, you will usually transfer a significant sum (often 10% of the purchase price) to your conveyancer. This is your deposit (not to be confused with a mortgage deposit). If you're also selling a property at the same time then your buyer will also provide a deposit, and your conveyancer can use the money from your buyer's deposit to pay all or part of your deposit. At this stage you are committed to the purchase, and should be prepared to lose this deposit should you change your mind.

As part of the exchange you will usually agree the date of completion (which might be the same day, but is most commonly a few weeks later). This is when your conveyancer sends the full funds to your vendor's conveyancer, and ownership of the property legally changes.

Money transfers are not always instant, and in a house sale various parties may want to double check things before a transfer is authorised, which can all add delay. Therefore conveyancers will usually ask for funds a day or two before they are needed.

You've not mentioned the agreed completion date. If there is a significant gap between exchange and completion then the deposit and balance would usually be sent to the conveyancer separately. This avoids unnecessary mortgage interest, or in the case of a cash buyer means the funds can remain in other investments until they are needed. You will not earn interest on money held by the conveyancer.

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In the US, at least, it's a wise idea because the lawyer holds the money in an escrow account, and the money transfer would have already cleared the bank. The seller's solicitor would have faith that all the money is with your solicitor, thus eliminating one slowdown.

(Of course, your solicitor might be crooked and needing your cash. Pretty unlikely, though.)

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