How deposits paid on exchange are held, released and recorded — and why the capacity in which a solicitor holds the money changes everything for the buyer.
A deposit paid on exchange sits in limbo between buyer and seller, and the rules governing it turn on a single distinction. This chapter explains what a stakeholder deposit is, the usual amount, and the two capacities — stakeholder or agent for the seller — in which a seller's solicitor may hold it, including the default under the Standard Conditions of Sale. It then examines what separates the two capacities and the risks a buyer faces when the deposit is held as agent, before setting out when a stakeholder may release the money, what happens where entitlement is disputed, and who takes the interest. Finally, it works through the classification and double-entry treatment of deposits under the SRA Accounts Rules and contrasts the buyer's remedies on a failed transaction under each capacity.
