Deposits, the forgotten middle child of Contract conditions

All conveyancing contracts in Queensland include a deposit. This is paid in either a lump sum or instalments to the stakeholder listed as on the Contract. This stakeholder is usually the Real Estate Agent, however if there isn’t one, or they don’t have a trust account, it is held by the seller’s solicitor. As your Conveyancing lawyers in Brisbane, Just Us Lawyers, manage a trust account to be used for this purpose.

INITIAL DEPOSIT

The initial deposit is a sum which is due either on one party signing the Contract, or a calculated date after the signing, but prior to the Cooling Off date. If no date is specified, then the deposit is due when the buyer signs the Contract.

BALANCE DEPOSIT

The balance deposit, if there is one, is a further amount which is due on a calculated date, usually on or after the unconditional date.

HOW MUCH IS PAYABLE?

A common question that Conveyancers and agents are asked is, what’s a normal amount? The total amount of deposit should not be more than 10% of the purchase price or 20% for Off the Plan Contracts. Other than this guide, it is up to the Buyer how much deposit they want to put down. It is suggested that you talk to the Agent before however, as they will know if there is an amount the seller is expecting as deposit. Also, if the seller thinks the amount offered is low, they may not believe the offer is serious.

DUE DATES FOR PAYMENT

So what does (or can) happen if you don’t pay your deposit by the due date? Well, you then become in default of the Contract. Once in default, the seller may terminate the Contract and make a claim to recover the unpaid deposit. For example, if you paid an initial deposit of $1,000.00 however if you were late to pay the balance deposit of $15,000.00; the seller can terminate the Contract and sue you for the remaining $15,000.00.

If the deposit/s is/are paid on time and there is a Real Estate Agent involved, they will hold the deposit in their trust account until settlement. Once settlement has been completed they will deduct their commission and pay any balance to the seller.

TERMINATION OF CONTRACT

If the Contract terminates under a condition of the Contract, the Seller may be entitled to claim the deposit as a penalty.   You should seek legal advice prior to entering into the Contract to establish your rights, in the event of such a matter arising.

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