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Why Pay Your Property Deposit On Time: Tips From A Residential Conveyancing Firm

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Why pay your property deposit on time: tips from a residential conveyancing firm

Sometimes, a property buyer does not or cannot pay their deposit on time. What are the potential implications? Here are some tips on what preparatory actions to take and why.

What does paying a deposit mean for property settlement in Perth?

What is a deposit? 

A deposit is a sum of money paid by the buyer to the real estate agent representing a seller. It signals the intent to purchase a property. In Western Australia, the buyer usually proposes the amount to the seller. Agreed deposits can vary between $500 and $20,000, and are usually between $1,000 and $5,000.

What are its implications? 

When should it be paid? 

The deposit is paid after both seller and buyer sign the ‘Contract for Sale of Land or Strata Title by Offer and Acceptance’ form (or O&A for short). 

How is the deposit handled? 

The buyer pays the deposit to a trust account agreed in the O&A.

The account is usually that of the real estate agent or seller’s conveyancer.

What preparations should buyers make before an auction or purchase?

Purchase strategy 

Plan your approach. For example, outline your property criteria, and check what funds you have available or the amount you are able to obtain on loan.  Research what properties are available that meet your criteria, and shortlist the ones to view in person.

For an auction

If the sale is by auction, ask the salesperson in charge prior what percentage or amount of deposit is payable to secure the property. Also find out what payment options are acceptable. This is usually by bank transfer or cheque, but could also be a pre-agreed deposit bond. You will then be prepared to proceed confidently if you are the successful bidder.

Be clear about your budget figure. On the day of the auction, be prepared to walk away if the bidding rises above what you have budgeted. It may be difficult to stop bidding if you get caught in the excitement of the moment. It might be good to have someone with you for support and backup.

For a private treaty sale

If the sale is private, first inspect the property to match your criteria. Then find out what the seller profile is (e.g., how quickly they want to release their property). Ideally, also start thinking about how you would finance the property before your purchase. Even better if you have already obtained financial pre-approval for a home loan. It will make the experience of securing your dream home less stressful and more enjoyable at crunch time. 

The seller and buyer should negotiate an agreement on how much deposit should be paid, and by when. The deposit must be paid into a trust account of the real estate agent or seller’s conveyancer.

What if a buyer does not pay a deposit on time?

Suppose the agreed deposit payment date has come and gone and the buyer has not paid it yet. Several things could happen next:

What if the buyer still wants to purchase the property after the contract is terminated? They will have to enter a fresh new O&A contract with the seller. This time, their offer may require different criteria, like paying a deposit upfront to secure the property. Now they may have a lower chance of success because of new competing offers from other buyers.

Want more great information about paying property deposits on time?

This blog gives you good reasons why it is important for buyers to pay their deposit on time. Know what you are in for  before signing an O&A.

Let our experienced property conveyancing practitioners at KDD Conveyancing Perth help you. Our friendly and knowledgeable conveyancers know the settlement process well in Western Australia. Contact KDD on (08) 9296 8717 or by email today.

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