A Deposit Bond (also called a Deposit Guarantee) is a Guarantee used as a substitute for all or part of a cash deposit (up to a maximum of 10% of the Purchase Price) for the period between signing contracts (exchange) and settling on a residential property. The Bond enables the purchaser to enter into a contract with the seller (vendor) without the need for a Cash Deposit. It does not remove the purchaser’s entire obligation to pay the deposit monies to the seller, because at settlement the purchaser is required to pay the full Purchase Price of the property to the seller.
If the purchaser defaults under the Contract of Sale for the Purchase and is required to forfeit a deposit, then the seller can claim the Bond Amount from the issuer of the Bond, because the Guarantee provided by the Bond is from the Bond Issuer to the seller for all or part of the deposit required at the signing of contracts. The Bond Issuer will then seek to recover the Bond Amount plus costs from the purchaser.
IA Deposit Bond or Guarantee can usually be approved and issued within 24 hours of application, thus enabling the purchaser to quickly enter into a contract for the purchase of a residential property.
Deposit Bonds are available for use in all states and are readily accepted by sellers who are usually anxious to obtain a contract on their property being sold. However, the seller has sole discretion to accept the Bond.
Yes, a Bond can be issued prior to an Auction Sale. The Bond amount is fixed but not the property details, this allows the purchaser to attend a number of auctions and simply complete the seller and property details when and if becoming a successful bidder.
Short Term Guarantee is valid for up to 6 months and suitable for purchasers expecting to settle within a 6 month time frame, including those purchasing at auction.
Long Term Guarantee is valid for up to 48 months and is suitable for those purchasing properties with longer settlements such as Off-the-Plan developments.
If the original Deposit Bond is returned unused within 60 days of issue, the Bond Fee will be refunded less an Administration Charge.
If you would like to enquire about or apply for a Deposit Bond, email us or contact our Call Centre on (02) 4633 8700.