What is a bank guarantee?

If your buyer does not have the cashflow for the purpose of making a cash deposit payment upfront, they may offer to give you a bank guarantee as security for the full deposit amount. A bank guarantee is basically a document provided by the buyer’s bank to confirm that they have the requisite amount of money in one of the accounts held in the buyer’s name and can provide the funds to the seller if it is claimed by the seller under the bank guarantee. Once given to you, the buyer will not be able to access the funds secured under the bank guarantee. However, you should get your conveyancing lawyer to check the conditions of the bank guarantee before accepting. If the standard contract used does not provide for the deposit by bank guarantee, you’ll need your conveyancing lawyer to specifically write one into the contract as a special condition to govern the use of it.