What the deposit represents
The deposit is an amount the buyer agrees to pay under the property contract. It forms part of the purchase price and is applied towards the amount owing at settlement.
Amount and timingAgreed in the contract, not set by law
Queensland does not prescribe a standard deposit amount for a residential property contract. The amount, payment structure and timing should be confirmed with your solicitor before you sign.
Payment timing
The contract specifies the amount, the due date or dates, the deposit holder and the payment method or account details. Missing a deposit deadline may place the buyer in breach of contract and can have serious consequences under the contract. Contact your solicitor immediately if payment may be late.
Initial and balance deposits
Some contracts divide the deposit into an initial deposit payable first and a balance deposit payable at a later date. Each payment deadline is recorded in the contract and must be understood before signing.
Trust and securityWhere the deposit is held
The deposit holder named in the contract commonly holds the funds in trust. This may be the selling agent, a law practice or another authorised deposit holder, depending on the transaction.
The funds remain in trust until the transaction is finalised, or until they can otherwise be paid out in accordance with the contract and applicable trust-account requirements. The deposit is not simply transferred to the seller when it is paid.
Settlement and terminationSettlement or valid termination
At settlement, the deposit is applied towards the purchase price and the buyer pays the remaining balance. Where a contract terminates instead, the outcome for the deposit depends on the contract, the reason for termination and whether the termination is valid.
Cooling off termination
If a buyer validly terminates during the statutory cooling off period, the seller may deduct an amount of up to 0.25% of the purchase price from the deposit. This is a maximum, not an automatic fixed deduction. The remaining deposit must be refunded within 14 days after termination.
On a $1.5 million purchase, $3,750 is the maximum possible deduction.
Finance and building and pest conditions
Not every contract contains a finance condition or a building and pest inspection condition. Where a contract does, the deposit will generally be returned if the buyer validly terminates under that condition and complies with its requirements. The precise outcome depends on the contract and the validity of the termination.
Buyer and seller defaultWhen the deposit may be at risk
If the buyer defaults
If a buyer defaults, for example by failing to complete after the contract becomes unconditional, the seller may have rights concerning the deposit and may seek further losses, depending on the contract and applicable law. Obtain immediate legal advice if you may be unable to complete the contract.
If the seller defaults
If the seller breaches the contract, the buyer may have rights concerning the return of the deposit and other remedies, depending on the contract and the circumstances. Obtain legal advice on the specific position.
Disputes and safeguardsProtecting the deposit
Disputed deposits
If entitlement to the deposit is disputed, the deposit holder must follow the applicable trust-account process and cannot simply release the disputed amount on one party's request.
These checks can help avoid missed deadlines, payment errors and unnecessary disputes.
Confirm the deposit amount
Confirm the exact deposit amount recorded in the contract before you sign.
Confirm every payment deadline
Record every payment deadline in the contract, including any balance deposit.
Verify the deposit holder and payment details
Verify the deposit holder and payment details through a trusted source before transferring any money.
Understand each contract condition and its deadline
Understand what each contract condition requires and the deadline that applies to it.
Contact your solicitor early if needed
Contact your solicitor immediately if a payment may be late or you may be unable to settle.
Worth knowing: Payment redirection fraud can target property deposits. Independently verify trust-account details using contact information you already trust, and confirm any change to those details before transferring money.