When buying a house in Australia, the deposit is typically due when the contract of sale is signed. This can either be on the same day or within a few business days, depending on the agreement with the seller.
If you’re purchasing at auction, the deposit is due immediately after winning the bid. Understanding when to pay the deposit and how much it should be is essential to ensuring a smooth property transaction.
In this article, we’ll answer common questions about the deposit process, including payment deadlines, standard amounts, and what happens if you don’t meet the requirements.
I. When Is the Deposit Due When Buying a House in Australia?
Once you and the seller have agreed on the price and conditions of the sale and both parties have signed the contract, the deposit must be paid. In most cases, the deposit is required to be paid on the same day the contract is signed, but there may be some flexibility depending on the situation.
In some cases, you might agree with the seller to pay the deposit within a few days after signing the contract. However, this should be discussed and agreed upon in advance, and it should be clearly outlined in the contract.
If you’re buying a property at auction, things are a little different. In Australia, when you buy a house at auction, the deposit is due immediately after the auction if you are the winning bidder. This means you need to be prepared to pay the deposit on the day of the auction itself.
Also Read: The Ultimate Guide to Purchasing Property Without a Deposit
II. How Much Is the Standard Deposit for a Property Purchase?
In Australia, the standard deposit when buying a house is usually 10% of the purchase price. This amount can vary depending on the agreement between the buyer and the seller, but 10% is the most common figure. For example, if you’re buying a house for $600,000, the deposit would typically be $60,000.
Sometimes, a smaller deposit of 5% may be accepted, but this will depend on the seller and the terms of the sale. In such cases, a larger final payment will be made on the settlement date, which is when the remaining balance of the purchase price is paid.
It’s important to confirm the deposit amount with your conveyancer or solicitor to make sure everything is in line with the contract.
Keep in mind that the deposit is a sign of your commitment to buying the property. It reassures the seller that you are serious about the purchase. If you fail to pay the deposit or cannot afford it, the seller might not feel comfortable proceeding with the sale.
III. Can I Pay the Deposit in Installments?
It is possible to pay the deposit in instalments, in certain circumstances, the buyer and seller may agree to split the deposit into two payments. For example, you might pay a smaller amount upfront (say 5%) when signing the contract, with the remaining 5% due later on but before settlement.
Again, this arrangement needs to be clearly outlined in the contract of sale and agreed upon by both parties.
If you’re interested in paying the deposit in instalments, it’s important to discuss this with your conveyancer or solicitor before making any agreements. They will be able to advise you on how to negotiate with the seller and ensure that the terms are legally binding.
Also Read: What to Know When Buying a House in Qld
IV. What Happens if I Don’t Pay the Deposit on Time?
If you fail to pay the deposit on time, there can be serious consequences. The first thing to remember is that the deposit is a crucial part of the contract of sale. By not paying it, you are technically in breach of the contract. This means that the seller could choose to cancel the sale altogether.
In most cases, if the deposit isn’t paid on time, the seller has the right to terminate the contract. This can happen without any warning, and you could lose the opportunity to purchase the property. The seller might even decide to sue you for damages, especially if they believe they have lost potential buyers due to your breach of contract.
In some situations, the seller might give you a short extension to pay the deposit, but this should not be expected. To avoid these complications, it’s crucial to be fully prepared to pay the deposit when it’s due, whether it’s on the day the contract is signed or within the agreed timeframe.
V. Is the Deposit Refundable if the Sale Falls Through?
Whether the deposit is refundable depends on the conditions outlined in the contract of sale and the reason for the sale falling through. If you decide to back out of the sale for reasons not covered in the contract (for example, changing your mind), you may lose your deposit.
The seller is legally entitled to keep the deposit if you breach the contract, which includes failing to follow through with the purchase.
However, if the contract includes special conditions that protect you as the buyer, such as a “subject to finance” clause, you may be entitled to a refund of your deposit. This clause allows you to back out of the sale without penalty if you’re unable to secure a loan. In this case, you would typically receive your deposit back in full.
Another scenario where you might get your deposit back is if the seller fails to meet their obligations under the contract. For example, if the seller cannot provide a clear title or there are major issues with the property that weren’t disclosed, you may be entitled to terminate the contract and receive a refund of your deposit.
Ready to Secure Your New Home?
Understanding when to pay the deposit and how it works is just one step in the process of buying a house. To make sure everything goes smoothly, it’s important to have an experienced conveyancer guiding you.
At CJC Law, we specialise in all aspects of property law and can provide expert advice tailored to your needs. Our team will ensure that your rights are protected and that you’re fully prepared every step of the way. Contact us today for professional assistance and peace of mind as you make your property dreams a reality!
