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Buyer’s deposit obligations

In Queensland, if you, as the Buyer, enter a standard contract of sale for the purchase of a house and land (using, most commonly, the ‘REIQ Contract for Houses and Residential Land (15th Ed)’ or in respect of the purchase of an apartment or townhouse, the ‘REIQ Contract for Residential Lots in a Community Titles Scheme (11th Ed)’) (‘Contract of Sale‘), you will generally be required to pay a ‘Deposit‘.

If a Deposit is payable, the amount of Deposit generally cannot exceed 10% of the ‘Purchase Price‘. The Deposit is payable in two parts, i.e. an ‘Initial Deposit‘ and a ‘Balance Deposit‘. The amount of the Initial Deposit and the Balance Deposit payable will be recorded in the ‘Reference Schedule‘ of the Contract of Sale (which is located at the front of the document). The Initial Deposit is payable on the day the Buyer signs the Contract of Sale, unless another time is specified in the Reference Schedule, and the Balance Deposit is payable on the date specified in the Reference Schedule.

Clauses 2.2 and 2.4 of the ‘Terms of Contract‘ (which is a section containing the standard terms and conditions of a Contract of Sale) deal with the issue of the Deposit payment and the parties’ respective entitlements to the Deposit under the Contract of Sale in the event of a default. In essence, the Buyer must pay the Deposit to the ‘Deposit Holder‘ as specified in the Reference Schedule (which is usually held in trust by the Seller’s real estate agency) at the times specified in the Reference Schedule.

The Deposit Holder will hold the Deposit until a party becomes entitled to it. The Buyer will be in default if the Buyer does not pay the Deposit as required. If the Contract of Sale settles, the Seller is entitled to the Deposit (plus any interest, if the Deposit was invested in an interest-bearing account by the Deposit Holder pursuant to clause 2.3 of the Terms of Contract). If the Contract of Sale is terminated without the default of the Buyer, the Buyer is entitled to a refund of the Deposit. However, if the Contract of Sale is terminated due to the Buyer’s default, the Seller is entitled to the Deposit, and to the extent that the Buyer has not paid any part of the Deposit as required, the Seller may recover from the Buyer that part of the Deposit as a liquidated debt. Depending on the nature of the Buyer’s default or breach, the Seller may also be entitled to claim damages and/or other relief against the Buyer.

Given the prices of properties these days, a 10% Deposit can be a substantial sum of money.

Accordingly, as a Buyer, understanding precisely what your obligations are under a Contract of Sale, both generally and in respect of the Deposit obligations, is vitally important, if you wish to avoid the unfortunate and potentially devastating consequence of having your Deposit forfeited or worse, being sued by the Seller for other breaches. Speaking with, and obtaining the assistance of, an experienced conveyancing lawyer with your Contract of Sale is highly recommended. Please contact AdviiLaw today to obtain an obligation free quote. Contact us on 07 3088 7937 or email us at [email protected].

This commentary is of a general nature only, containing nothing more than some general information for the reader. It is not intended to be legal advice, nor cannot it be relied upon as legal advice. To this end, please read our Website Terms including the disclaimer contained therein carefully. Laws, rules and principles may be subject to sudden and unexpected changes and you should always consult a lawyer about your specific circumstances.

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Celia McQueen
Celia McQueen
10:38 17 May 21
Alice helped us with the purchase of our first home, and we greatly appreciated her attention to detail and clear... communication throughout the process. We would gladly work with her again or recommend her to others. Thanks Alice!read more
Natalie Dugec
Natalie Dugec
10:55 12 Apr 21
I am extremely grateful for the help I received from ADVIILAW. I required their services for a defamation case and... their services exceeded my expectations. At any time I needed them they were always available to help promptly and did so with a high level of professionalism. Zoran Gelic is great to work with. He explained every step in detail so that I could clearly comprehend and make informed decisions to support my case. This assisted with the positive outcome. If you need a lawyer. I highly recommend ADVIILAWread more
Michael Zarafa
Michael Zarafa
21:56 01 Apr 21
I highly recommend Zoran Gelic as a defamation lawyer. He has a proactive approach and explains everything in detail. I... ended up with a positive outcome and the experience I had with him was fantastic. Keep up the great work Zoran.read more
Rodney McEwan
Rodney McEwan
08:26 31 Mar 21
I can highly recommend Zoran Gelic from Adviilaw who attended to a defamation matter on our behalf. Zoran was extremely... knowledgeable, helpful and professional in resolving this matter. I can highly recommend Zoran Gelic to anyone in need of a lawyer, specifically in relation to defamation law matters.read more
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Excellent services. I highly recommend AdviiLaw for any commercial legal help.
Carly McClintock
Carly McClintock
10:24 21 Dec 20
Alice was very professional, efficient and knowledgeable with her work, while helping us understand the process in... buying our first home. I highly recommend AdviiLaw for all your conveyancing needs.read more
Bill Vo
Bill Vo
22:03 01 Dec 20
Thank you Alice for your dedication and attention to detail towards our first home loan! Alice came highly recommended... by our broker and from day 1 Alice was very professional and courteous.Alice literally went above and beyond throughout the entire process to ensure the outcome would be in our best interest.I highly recommend to contact AdviiLaw, not just for conveyancing but for other solicitor services too!Thank you again Alice!read more
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