The attorney for the purchaser should always try to negotiate and reduce the deposit. This deposit is appropriated to replenish the seller of the losses incurred by him in case the purchaser fails to complete the contract. If the seller seeks a higher price, then the seller may be asked to accept less on the basis that 10 per cent would be more than enough compensation. There are two other things that should be taken into consideration:
If the purchaser’s mortgage exceeds 90 per cent of the purchase price and the purchaser has insufficient funds to finance a 10 per cent deposit
If the purchaser is financing the deposit out of the moneys receivable from deposit on a related sale and the sale price is less than the purchase price. Here, again the purchaser will have insufficient funds.
Therefore, the attorney for the seller should not accept 10 per cent without taking into consideration whether the seller will be adequately compensated for any loss that might take place. So, while making the contract, the seller’s attorney has to be very careful. On the other hand, if less than 10 per cent has been paid on exchange and the seller serves a notice upon the purchaser a Notice to Complete, then the purchaser immediately has to pay the 10 per cent.
