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The Conveyancing Committee has been asked for its view on the rights and obligations of a solicitor acting for a vendor in a sale who receives from the purchaser’s solicitor a contract for sale in a form acceptable to the vendor, accompanied by a cheque for the agreed deposit, so that all that remains for the contract to become effective is for it to be signed by or on behalf of the vendor and exchanged.

The Committee is of the view that the vendor’s solicitor should negotiate the cheque and hold the proceeds on trust for the purchaser pending the exchange of contracts, or if the vendor declines to proceed to an exchange, until the purchaser requires the amount of the deposit to be returned.

The Committee is satisfied that the negotiation of the cheque for the deposit does not derogate from a vendor’s position of not being bound until contracts are exchanged. A vendor is entitled to know that the deposit has been validly tendered, which requires the clearance of the cheque. It is clearly more efficient to arrange to have the deposit cheque cleared as soon as possible in order to avoid any delay after the vendor has signed.

The position where the contract is returned with amendments on which the vendor’s instructions must be obtained is more obviously one in which the vendor cannot be bound by the negotiation of the deposit cheque in advance of the exchange of contracts.

The proceeds of the deposit cheque may not strictly speaking be clients’ monies since the purchaser is not a client of the vendor’s solicitor The proceeds are, however, "trust money" and must be held by the vendor’s solicitor as such. They are not held by the vendor’s solicitor as stakeholder until such time as the contract comes into effect. In acknowledging the receipt of the contract and deposit, the vendor’s solicitor should advise the purchaser’s solicitor that the deposit cheque is being negotiated and that the proceeds will be held by the vendor’s solicitor in trust for the purchaser pending the parties becoming contractually bound.

The proceeds of the deposit cheque should be paid either:

• Into a trust bank account kept solely for the money subject to the particular trust, or
• Into a client bank account.

The Conveyancing Committee has made the following revisions to the 1996 edition of the Law Society’s Objections and requisitions on title and same will be incorporated in the next reprint of the Requisitions which is due shortly.

1. Front page of the Requisitions:

a) The words "RSI No:" have been added under both ""Vendor" and "Purchaser" on the front page. (Please note that this amendment will also be incorporated in the next reprint of the Conditions of sale).

b) At the foot of the page the word "(Revised)" has been inserted after the word "Edition".

2. Requisition 15 Voluntary dispositions/bankruptcy:

The old paragraph c has been deleted and the old paragraph d has been renumbered as "c"

3. Requisition 16.7 and 16.9:

The figure of £100,000 has been changed to £150,000 in both paragraphs.

4. Requisition 27.6b:

The old sub-paragraph b has been deleted and replaced with a new sub-paragraph b as follows:

"(Save where the retention permission relates only to a change of use and there were no conditions attached to said permission or was granted in respect of a private house more than ten years ago) satisfactory evidence from an architect/engineer that the drawings submitted on the application for retention correctly shows the structure(s) as built and that the conditions (if any) attached to the retention permission have been complied with".

5. Requisition 30.1:

The word "commencement" in the fifth line has been replaced with the word "construction".

Practitioners are recommended to make a note of these revisions and incorporate same when raising Requisitions on title, including those practitioners who use the CORT computerised version of the Requisitions.