When contracts are exchanged on a property sale, the buyer normally pays a deposit — usually 10% of the price — and someone has to hold it until completion. As a solicitor acting on either side, you need to know in what capacity that money is held, because it determines who owns it, whether it can be used straight away, and what the buyer can recover if the deal falls through. It also dictates how the money is recorded and moved through your accounts.
This lesson builds that understanding step by step.
- Nature, Purpose and Capacity — what a stakeholder deposit is, the conventional amount, and the two capacities in which a deposit may be held.
- Stakeholder vs Agent for the Seller — the crucial difference between holding neutrally for both parties and holding as the seller's own money, and what the buyer must be warned about.
- Releasing a Stakeholder Deposit — the events that permit release, why a demand alone is not enough, and what to do in a genuine dispute.
- Accounting Treatment and Bookkeeping — how each capacity is classified under the SRA Accounts Rules and the correct double-entry on receipt and release.
- Buyer's Position on Failure — the remedies available to the buyer when a transaction collapses under each holding capacity.