Paying a deposit

[whatever123]

Hi Just a couple of quickies if anyone has time to answer!

If putting an offer on a residential house in Qld, is 5% deposit pretty standard or should it be more.

If you can't follow through for whatever reason (eg failed building report), provided that you had it as one of the conditions of sale, would you get all your deposit back, or are they allowed to take some kind of administration fee?

Last of all, the agent usually ask the buyer to complete an intention of offer, but some agents have told me this isnt a legal contract. One recently told me that the owner agrees to the price on the letter of offer, and only after you sign the contract of sale does it become fully binding.

 

[bellz]

We see lots of contracts with only $500 to $1000 deposit, not 5% at all. Some of them will have a small payment up front with a larger deposit when it goes unconditional.

As long as the contract is subject to finance and/or pest and building, you should get the whole deposit back if your finance is declined or not being happy with the pest/building.

As far as I know, the Contract is legally binding, nothing else.

 

[Aaron_C]

Also consider trying to negotiate for a deposit bond in lieu of an actual deposit.

 

[Jtkumnick]

Hi Just a couple of quickies if anyone has time to answer!

If putting an offer on a residential house in Qld, is 5% deposit pretty standard or should it be more.

If you can't follow through for whatever reason (eg failed building report), provided that you had it as one of the conditions of sale, would you get all your deposit back, or are they allowed to take some kind of administration fee?

Last of all, the agent usually ask the buyer to complete an intention of offer, but some agents have told me this isnt a legal contract. One recently told me that the owner agrees to the price on the letter of offer, and only after you sign the contract of sale does it become fully binding.

What you have said is all pretty right for QLD.
* Deposit is negotiable to a max of 10%. It shows intent. Personally anyone that approaches me with a $500 deposit, deposit bond etc I would expect a higher offer price.
* It is held in trust until settlement.
* If you have a contract subject to a condition and that condition is not met, you get the deposit back.
* The intention of offer is not binding, it is used by REA to get the details necessary to put into the actual contract, prior to being signed by you then seller.
* Contracts are binding on acceptance and full copy being received by both parties.
* If you use the 5 day cooling off period to pull out, there is a .25 of 1% penalty.

 

[Ed Barton]

What you have said is all pretty right for QLD.
* Deposit is negotiable to a max of 10%. It shows intent. Personally anyone that approaches me with a $500 deposit, deposit bond etc I would expect a higher offer price.

Is that a 'holding' deposit or deposit after/at exchange?

I've only ever been asked to supply a deposit once the contract has been signed in QLD. Usually 5% or a 'reasonable' figure. I'm pretty sure I've never been asked to supply a 'holding' deposit as other states seem to ask for.

 

[Jtkumnick]

Is that a 'holding' deposit or deposit after/at exchange?

I've only ever been asked to supply a deposit once the contract has been signed in QLD. Usually 5% or a 'reasonable' figure. I'm pretty sure I've never been asked to supply a 'holding' deposit as other states seem to ask for.

Some people like to staple a cheque to their offer. Really just a pain as agent has to account for it in the trust account then account for the refund if the offer is not accepted. More paperwork for nothing.

Deposit can be anything up to 10%, over that and it becomes an instalment contract which is completely different.

Reasonable is subjective, but of the countless contracts I have seen fall over 90% of them had deposits under $1,000. A small deposit in a slow market is a red flag.......

 

[M.Investigator]

Last of all, the agent usually ask the buyer to complete an intention of offer, but some agents have told me this isnt a legal contract. One recently told me that the owner agrees to the price on the letter of offer, and only after you sign the contract of sale does it become fully binding.

The intention of offer is not legally binding for neither you nor the seller.

You, and even the seller, can pull out of the deal at any time before the contract is signed and exchanged.

Not only that, but you can even renegotiate the offer price just before you sign the contract. For example, let's say that you made an original offer of $400,000 which the seller agreed. You quickly do an inspection, including a building inspection, but you find significant structural damages that will cost you about $10,000 to repair.

You can actually suggest for the seller to lower the price to $390,000 or lower because of those damages which you have to pay for.

 

[Freddie Mac]

Deposit can be anything up to 10%, over that and it becomes an instalment contract which is completely different.

Does anybody know what the advantages/disadvantages are for giving a greater than 10% deposit (instalment contract)?

 

[eeho]

I always add a condition into my offer with '$1000 deposit paid within 3 days of both parties signing the contract with balance paid upon settlement'.

 

[Big Will]

Way to necro old forum posts

 

[Perp]

It is a very common misconception that only "the contract" is binding, but this is a simplification of the law. It mostly holds true, particularly when such documents are later replaced by a standard form contract, but relying on this simplification can get you in big trouble by causing you to think you're not committed, when in fact, you are.

In terms of QLD law, Section 11 of the Property Law Act 1974 requires that interests in land (both transfers and leases) be evidenced in writing, so you can't have an enforceable verbal contract for sale or lease. But it does not require that such written evidence be on a standard contractual form.

The case law is extensive, and for a contract for sale of land to be binding, there are certain things that need to be in writing, such as - off the top of my head - the names of the buyer and seller, an unambiguous description of the subject property, the date of settlement, and the contract price. (There might be others; as stated, this off the top of my head.)

If you have all of the necessary elements evidenced in writing, and with both parties' signatures, then you have a binding contract. It can later be displaced by the mutual agreement of both parties with a standard form contract, and usually is, but if one of the parties changes their mind and refuses to sign a standard form contract, the other party may well be able to enforce the already-existing binding contract. (It's happened, many times.)

So if you sign a letter of offer, and that offer contains the above information, and the seller counter-signs it, you're both bound by those terms (unless you both agree to replace it with a standard term contract).

The evidence also doesn't have to exist all in one document, several documents can be "joined" together to evidence the contract.

It also doesn't necessarily have to be signed by the parties personally. For example, if there's evidence that you authorised the agent to make the offer - such as an email or fax from you - and the agent prepares an offer form with this info, and the vendor counter-signs, you may also find yourself in a binding contract on those terms, if it's not later replaced with a standard form contract.

Be very careful about accepting advice about what is and isn't binding from anybody but a lawyer. (And that includes from me. I know just enough to give you that warning. )

 

[Peterw]

Perp, you are quite correct, and yes a lawyers opinion would be wish to seek. I recall when going through licencing, being informed that there were 7 critical parts to a contract
1. Full Name of Seller
2. Full Name of Buyer
3. Clear description of the item of service
4. The terms and conditions of the offer
5. The consideration
6. Acceptance of the offer
7. Communication of acceptance.

I have had the situation happen a few times over the years, where a seller has accepted an offer, signed the contract and before I can get the words out to the Buyer that their offer has been accepted, they state that they wish to withdraw their offer.

I believe that in Contract Law 101, they raise other issues, ie the capacity of the parties, certainty and a few other things.

From what I have seen, the Offer and Acceptance forms sometimes used by agents do not contain sufficient parts to be deemed a contract, they are used to help clear the ground when you have a lot of people, and you want to work out who is at the top of the pile, and who is at the bottom.