When agreement is reached to buy a property, the purchaser is normally required to pay a deposit of 10% of the purchase price. Normally, the deposit will be held in the real estate agent’s trust account until settlement. No-one earns any interest. It just sits there.
Paying the deposit quickly is a sign of good faith, however, it does not “hold” the property for you.
You still need to exchange contracts.
What happens if I don’t pay my deposit on time?
It’s rare, but there is the odd instance where payment of a deposit has been delayed, or sometimes not paid at all.
Under the standard terms of the contract for sale, the 10% deposit MUST be paid either before or at the time contracts are exchanged. Special conditions (by agreement with the vendor) may be included in the contract to vary this standard provision.
If a purchaser does not pay the deposit to the deposit holder (normally the real estate agent) when required, they will be in default of their obligations under the terms of the contract.
When a purchaser is in default, a vendor gains certain rights including termination of the contract. If the vendor has the right to terminate, they may also have the right to pursue the purchaser for 10% of the purchase price (i.e. the deposit). The vendor may also have other rights they can pursue.
If you are planning to purchase a property, have your deposit ready to go and don’t delay paying the deposit to the agent.
If you are relying on financing, consider arranging a deposit bond in order to secure the 10%. You will need the vendor’s approval to use a deposit bond as some vendor’s (for example some developers) may not accept one.
If you can’t pay your deposit on time or at all, please call us to discuss your options as soon as you are aware of the situation.
As your conveyancer, we may be able to negotiate an extension of time for you to pay the deposit and keep you from defaulting under the terms of the contract.
If you have any questions about your situation, contact me via leah@stevensconveyancing.com.au or call 0414 894 031 to discuss.
Please note that the information contained in this article is of a general nature only and does not constitute legal advice. Stevens Conveyancing does not take responsibility for any errors or omissions obtained from the use of this information.