Why do you need a deposit bond? Well, let’s just say it’s insurance. Literally.
A deposit bond, also called a deposit guarantee, is an insurance policy that acts as a guarantee to the vendor that the purchaser will pay the deposit at settlement. A deposit bond acts as cash substitute. It can be used when exchanging contracts and at auctions, and—this is particularly important—when you can’t immediately produce the cash required for the upfront deposit, which as we all know is usually 10% of the property price.
But sometimes a deposit bond may not be suitable.
Some vendors, for instance, may not accept a deposit bond. This can be because they need early access to the deposit in order to secure a new home for themselves. A deposit bond, being only a guarantee, cannot be used for this purpose.
Real estate agents are typically paid their commission from the deposit, so they may tend to refuse deposit bonds because they want to get their payment early in the sale process.
If prior consent has not been granted by the vendor and stipulated in writing, using a deposit bond may be in breach of the contract terms and the buyer could be liable for extra costs that they have not been prepared for.
Donate To The Indian Sun
Dear Reader,The Indian Sun is an independent organisation committed to community journalism. We have, through the years, been able to reach a wide audience especially with the growth of social media, where we also have a strong presence. With platforms such as YouTube videos, we have been able to engage in different forms of storytelling. However, the past few years, like many media organisations around the world, it has not been an easy path. We have a greater challenge. We believe community journalism is very important for a multicultural country like Australia. We’re not able to do everything, but we aim for some of the most interesting stories and journalism of quality. We call upon readers like you to support us and make any contribution. Do make a DONATION NOW so we can continue with the volume and quality journalism that we are able to practice.
Thank you for your support.
Best wishes,
Team The Indian Sun
