Which statement accurately describes the deposit arrangement on exchange?

• A. The deposit is 5% on exchange.
• B. A 10% deposit is paid on exchange.
• C. Deposits are not used in conveyancing.
• D. Deposit is paid on completion.

Answer: (B)

On exchange, the buyer pays a deposit to show they are serious and to secure the contract. The standard amount is typically ten percent of the purchase price. This money is held by the solicitors (often in a client or escrow account) and is then applied to the purchase price when completion occurs. If the buyer breaches and the deal falls through, the deposit can be forfeited as a remedy, depending on the contract terms; if the seller breaches, the deposit may be recoverable or there may be alternative remedies.

So the statement describing a ten percent deposit paid on exchange is the best fit because it reflects the common, practical arrangement used in residential conveyancing. The idea that it’s five percent is not the usual default, and deposits are indeed used in conveyancing and are not paid on completion.