What is a deposit?
A deposit is a sum of money which is payable by the buyer when purchasing a property, usually to the seller’s solicitor’s trust account or the real estate agent’s trust account. The deposit should not be over 10% of the total purchase price and for more information on deposits, you may view our previous blog article here.
For the sake of this blog, we are referring to the deposits payable under the majority of contracts in Queensland for the sale and purchase of residential property (mainly REIQ contracts).
All contracts are different, so it is important you have yours reviewed by a lawyer before signing anything.
What does ‘time to remain of the essence’ mean?
In most contracts, time is of the essence. This means that performance of a contractual obligations on the specified dates, must be strictly adhered to.
Generally, finance conditions, building and pest conditions or other buyer or seller conditions are required to be complied with by 5pm on the due date and if notice is not provided by the buyer to the seller or the seller’s solicitor by 5pm on the due date, then the seller may terminate the contract and the buyer will get their deposit back.
HOWEVER, this is not the case with deposit due dates.
What happens if I do not pay my deposit on time?
If the deposit is not paid by the buyer to the deposit holder by 5pm on the due date, the seller has the right to:
- terminate the contract; and
- forfeit any deposit paid to date; and
- sue the buyer.
This is why it is important you are always available to contact us when your conditions or settlements are due!
What happens if I have asked for an extension of the due date, but I can then pay earlier?
If you have not paid your deposit by the due date and have asked for an extension of time, but the seller has not granted any extensions yet, then you are still in breach of contract and if you do pay any or the full deposit during this ‘limbo’, the seller is able to forfeit that deposit once payment is made by you.
How do I ensure I comply with the conditions by the due date and time?
There are many steps you must take once a contract is signed; some things you should look out for are noted in this FC Lawyers blog.
It is important that you diarise all dates and that ensure that you read all of the first letters and emails we send you to remind you of these due dates.
This is why it is crucial that you speak with us before signing a contract, so that you are well prepared for the next steps in the usually fast paced conveyancing process!
Contact our team today to speak with us regarding any property matters.
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