We are looking at buying a place in Melbourne and were wondering if the vendor has access to the deposit paid by the purchaser, or whether it must pass a certain threshold first?
If it must be above a certain threshold, who has access to the account and interest?Hi there
if you follow the link
http://www.reiv.com.au/reivsamples/118COS_RE.pdf
it will provide an example of the contract of sale applicable in Victoria
you can have a deposit go into an interest bearing account – and regulate how interest is dealt with – can be a bit of drag cause you have to have Tax file numbers etc to open the account
you can also negotiate how much the deposit is – though traditionally real estate agents will try and get 10% so that there commission for the sale is paid
have you thought of perhaps offering a nominal deposit and offering a deposit bond (which is something your solicitor can do) – being basically a promise to pay the deposit
that way you keep the interest on your money
thanksIf you are after a deposit bond check out this company
http://www.depositpower.com.au/
If you use a bond the real estate agent will be paid regardless of what happens and the Vendor. Then Deposit Power will ask you to paid the deposit bond amount in this scenario of the sale falling through.Duckster Financial Services
http://www.ducksterfinancial.com
Helping to make the great Australian Dream come true !Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Mal111:We are looking at buying a place in Melbourne and were wondering if the vendor has access to the deposit paid by the purchaser, or whether it must pass a certain threshold first?
If it must be above a certain threshold, who has access to the account and interest?Hi Mal,
I am from Melb and have experienced this, but not for a while.
Anyway, from memory the way it works is the agent usually approaches the Purchaser and asks if he/she would mind releasing the deposit earlier than settlement. The primary reason for this I would guess is so the agent can get his/her commission before settlement, or if the deposit is sizeable, the Vendor may need/want the funds for another purpose in a hurry.It can only be released if the Contract of Sale is unconditional, and if the Purchaser agrees. Then what happens is the agent provides the Purchaser and Vendor with a form called a Section 27 to fill out and sign.
The form is returned to the agent and after about a week the agent is allowed to withdraw the deposit from their agency trust account, and distribute the money to the Vendor and the agent.
Other than this, the deposit must stay in the agent’s trust account until settlement has occurred.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
The deposit is initially paid to the agent, and is only released to the vendor once your solicitor or conveyancer is satisfied with the following:
1. The answers to requisitions on title are satisfactory.
2. The Contract of Sale is unconditional (ie. not subject to finance or building inspection).
3. There is sufficient equity in the vendor’s mortgage for the deposit to be released to the vendor (ie. it’s not required to pay out the mortgage).
4. He/she is satisfied with the results of all searches and enquiries.
The vendor’s solicitor will serve a request on the purchaser’s solicitor asking for the purchaser’s consent to the release of the deposit. The purchaser’s solicitor has 28 days to give a reasonable objection.
I hope this helps.
Julie
Property Conveyancer
Melbourne
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