What is a deposit?
A deposit is a sum of money paid under the Contract, prior to or at settlement, which could be forfeited and kept by the Seller if the Buyer breaches the Contract. A deposit should not be greater than 10% (or 20% for a proposed lot sale (i.e. an off the plan contract)). If a payment exceeds this amount, it is no longer classified as a deposit at law and is considered an instalment.
When is the deposit due?
A deposit is due on the date set out in the Contract schedule. For standard REIQ contracts, the initial deposit is payable on signing of the contract by the Buyer unless otherwise stipulated.
What happens if the deposit is paid late?
The payment of the deposit under the contract is an essential term. As time is of the essence for REIQ and ADL contracts in Queensland, if a deposit is paid late, even by one day, this will generally be a breach of the contract which will entitle the Seller to –
- Terminate the contract; and
- Retain any deposit already paid by the Buyer; and
- Sue the Buyer for the unpaid deposit amount; and
- Sue the Buyer for further contract damages.
If a deposit is not paid at all, then the Seller will have the same rights set out above.
What should I do if I know the deposit hasn’t been paid or was paid late?
You should let the Seller’s solicitor know so they can discuss with the Seller and consider further steps which may be necessary (if any).