Generally, a 10% deposit is payable by the purchaser prior to or upon exchange of contracts. This deposit is usually held by the real estate agent or the vendor’s Conveyancer or Conveyancing Solicitor in trust until settlement (at which time the vendor is entitled to receive the purchase money). The deposit may be seen to be a representation of the purchaser entering into the contract in good faith and also to provide a form of liquidated damages to the vendor in the event that the purchaser fails to complete the contract.
It is not uncommon for vendors to accept a deposit bond in place of a deposit. A deposit bond is a substitute for the cash deposit. Deposit bonds are issued by an insurance company or financial institution and generally provide a guarantee to the vendor that in the event the purchaser is in default, they will pay the 10% deposit.
Deposit bonds may be useful in the following circumstances:-
- You would prefer to leave your savings in your savings account
- You do not have the necessary funds at the time of exchange
- The property being purchased is an off the plan property (meaning it may not settle for a number of months or years)
- You are looking to purchase a property at auction, so are unsure how much will be required by way of cash or bank cheque
The purchaser will normally pay a non-refundable premium to obtain the deposit bond. Normally the insurance company or financial institution requires the purchaser to show evidence that they have the capacity to pay the full purchase amount at settlement.
Note that although many vendors have no problem substituting the deposit with a deposit bond, the vendor is not obliged to accept a deposit bond. As such, if you are intending to provide a deposit bond, it is always worth checking with the vendor or agent prior to bidding or making an offer.
For more information, contact our office and speak to a Sydney Conveyancer & Conveyancing Solicitor. Other than our head office in Sydney CBD, our Conveyancers & Lawyers also have branch offices in Parramatta, Hurstville, Liverpool, Campbelltown, North Sydney, Gordon and Baulkham Hills. For a full list of our office locations, with complete addresses, click on our Locations tab above or contact our main office line on (02) 9233 4048.
- We have been operating since 2001
- Fixed Fees - $ 590 plus disbursements
- We have a 'can do culture' - we deliver
- We promptly return phone calls and emails
- We have regular repeat business
- Our staff attend Sydney settlemements
- Our staff are humble and hard working
- Senior staff hold Honours Law degrees
- Senior staff personally oversee your file
- We have state of the art technology
This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.
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Tags: conveyancing, residential purchase
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If you are buying or selling a property and require Conveyancing services, you should make an appointment to see one of our Conveyancing Lawyers in one of the following locations:
- Sydney
- Parramatta
- North Sydney
- Hurstville
- Liverpool
- Gordon
- Baulkham Hills
- Campbelltown
- Bondi Junction
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- Conveyancer Sydney
- Conveyancing Solicitor Sydney
- Property Lawyer Sydney
- Property Solicitor Sydney
- Conveyancing Lawyer Parramatta
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- Property Lawyer Parramatta
- Property Solicitor Parramatta
- Conveyancing Lawyer North Sydney
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- Property Lawyer North Sydney
- Property Solicitor North Sydney
- Conveyancing Lawyer Hurstville
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- Property Solicitor Hurstville
- Conveyancing Lawyer Liverpool
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- Conveyancing Lawyer Gordon
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- Property Solicitor Gordon
- Conveyancing Lawyer Baulkham Hills
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- Conveyancing Lawyer Campbelltown
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- Conveyancing Lawyer Bondi Junction
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- Property Solicitor Bondi Junction