Welcome to Anderson Boemi Lawyers | Opening Hours: 8:30am - 5:00pm Mon to Fri
A purchaser under a Contract for Sale in New South Wales in required to pay a deposit upon exchange. This is generally 10% of the purchase price. The balance of the purchase price is then paid at settlement. If a purchaser defaults under the Contract, the seller may be able to keep the 10% deposit. Recently, it has become increasingly common for Purchasers to request a 5% deposit on exchange.
There are important considerations that a seller must make when determining whether they should accept a reduced deposit. It is imperative to understand that if a 5% deposit is accepted and the Contract is terminated, the seller will have to try and recover the balance of the remaining 5%. This may involve commencing proceedings which is a costly process with an uncertain outcome.
It has also become common practice for the seller’s solicitor to place in a special condition in the Contract stating that the deposit is to be paid in two installments. The first 5% at the time of exchange and then the remaining on settlement. While this may protect the seller to some extent, it does not guarantee the recovery of the remaining 5%.
A Deposit Bond can be a safer option that acts as a substitute for the cash deposit. These are a guarantee by the bank that the 10% deposit will be paid. So, should the purchaser default, the seller will be able to recover the money by calling in the deposit bond and avoid a potential costly legal process.
If you are thinking about entering into a property transaction or require any assistance with respect to your property matters, please contact our team at Anderson Boemi Lawyers on 02 9653 9466.
Disclaimer
The content of the Anderson Boemi Lawyers website is provided for information purposes only. The contents of this website do not constitute legal advice and should not be used as such. Formal legal advice should be sought in particular matters. If you have a particular matter you need legal advice for, or you have any questions about our disclaimer please contact our office on (02) 9653 9466.