What is a deposit and how do I pay it?

The deposit is the down payment that you make when you first sign a contract to show that you are genuine about purchasing the property. It is the seller’s security that if you do not complete the contract on time by settlement date, that they can take steps to claim your deposit. Hence, before you sign the contract, you should ascertain that you really want to proceed with the purchase.

The deposit is often held by the seller’s real estate agent until settlement, after which it will be released to the seller. There are times when the deposit may be held by the seller’s conveyancers, usually because the seller’s real estate agent does not hold a trust account, or that the seller needs the deposit to be released at the same time as settlement. If neither the seller’s conveyancers nor real estate agent has a trust account, then the seller may ask that the buyer’s conveyancer hold the deposit in their trust account.

In any case, because trust accounts are heavily regulated by all the legislations governing it for all three professions involved: real estate agents, conveyancers and conveyancing lawyers, you should be reassured that your money is safe.

You can make the payment these days by electronic funds transfer (EFT) to the bank account of the relevant stakeholder. It is as simple as asking the real estate agent for their bank account details to make the payment upfront. Remember to always ask for a trust receipt for your records, you may need this as a part of your loan application.