When you sign a contract to buy a house, you will be required to pay a deposit. In this article, we discuss all things deposit.
How much is the deposit?
The amount of the deposit is a matter of negotiation between the parties. In Queensland, deposits are usually 5% of the purchase price.
Usually, the real estate agent will try and ensure that the deposit amount equals to or exceeds the commission payable on the sale and that the deposit is paid into the real estate agents trust account. In this way, the real estate agent is guaranteed payment of its commission by the seller.
What happens if the deposit is more than 10%?
If the deposit is more than 10%, the contract will be an instalment contract. If the contract is an instillment contract – the rights of the seller and buyer are significantly altered. If you have paid more than 10%, seek legal advice without further delay.
When is the deposit paid?
The buyer must pay:
- the whole of the deposit at the time of signing the contract; or
- part of the deposit when signing the contract and the remainder at a later date.
It is common for the buyer to pay a small deposit at signing and then the remainder of the deposit at a alter date, usually when conditions (such as finance) have been satisfied. Check your contract to determine the date the deposits are due. If you don’t pay deposits when they are due, you will be in default of your contract.
Who is the deposit paid to?
The deposit should be paid to the deposit holder as identified in the contract. Usually, the deposit holder is the real estate agent. Payment should be made into the trust account.
The real estate agent will hold the deposit in their trust account. The deposit is offset against the purchase price – this means the amount you need to pay at settlement is reduced by the deposit amount paid.
If you have any questions about this article or wish to discuss its contents, please call 1300 080 569 or email [email protected]
Irfan Ebrahim
27/01/2022
DISCLAIMER: This article is provided for general information purposes only. Its content is current at the date of preparation. Changes in circumstances or policy or legislation after the time of preparation may impact the accuracy of the information provided. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice from a qualified professional based on your specific circumstances before taking any action concerning the matters discussed in this guide. One80 Conveyancing Pty Ltd will not accept liability for any reliance on this article, including but not limited to, the accuracy, currency or completeness of any information or links.
