Are you or someone you know in the process of buying a home in Queensland? You may be surprised to learn that you are not always required to pay a 10% deposit when signing the contract.
Under standard property contracts in Queensland, such as the REIQ contract, the 10% deposit is the default and most common amount. However, it is entirely possible to negotiate a lower deposit if the seller agrees. If a lower deposit is negotiated, it is essential that this is clearly documented in the contract. To ensure the contract is amended correctly and protects your interests, we strongly recommend engaging a solicitor.
The deposit is typically payable after signing the contract, within the timeframe specified in the agreement. It is therefore crucial to discuss the timeline and any amendments with your solicitor to avoid inadvertently breaching the contract.
Understanding the Types of Deposits
Many buyers are unaware that the term “deposit” can refer to different payments at various stages of the transaction. Here is an overview of the main types:
- Holding Deposit
• A small payment made prior to signing the formal contract.
• Demonstrates your intention to purchase but is not legally binding.
• Usually refundable if the contract is not executed.
- Contract Deposit
• Paid after the formal contract is signed.
• Typically 5% to 10% of the purchase price.
• If you default, you risk forfeiting this amount.
- Settlement Payment (Balance Deposit)
• The balance paid on settlement day.
• Combined with loan funds to complete the total purchase price.
Risks of Negotiating a Lower Deposit
While negotiating a lower deposit may seem advantageous, it is important to be aware of the risks:
- In a competitive market, sellers may favour buyers offering the standard 10% deposit.
- A lower deposit does not reduce your financial obligation at settlement — you remain liable for the full purchase price less the deposit.
- If you default, you risk forfeiting the full deposit amount, whether it is 5% or 10%.
Alternative Options: Bank Guarantee or Deposit Bond
If you are unable to provide a cash deposit, you may wish to explore alternative options. Note, however, that these options are always subject to the seller’s approval.
- Bank Guarantee: A formal commitment by your bank to pay the deposit amount to the seller if you default.
Learn more:
• Commonwealth Bank
• Westpac
• NAB
- Deposit Bond: A written guarantee from an insurer or financial institution promising the seller payment of the deposit if you fail to complete the purchase.
Learn more:
• Mortgage Choice
• Deposit Assure
• QBE
Final Tips
- Always negotiate the deposit amount before signing the contract.
- Ensure any agreed deposit arrangements are clearly and properly reflected in the contract.
- Engage a solicitor to safeguard your legal interests and ensure compliance with all contractual requirements.
✅ Need assistance negotiating your deposit or navigating your property purchase?
Our team at W & G Lawyers is ready to guide you with expert legal support.
Contact us at ✉ info@wglawyers.com.au or 📞 0433 071 350.
External Links and References
• QLD Government – Advice on buying a home
Disclaimer
The content of this article is provided for general information purposes only and does not constitute legal advice. While every effort is made to ensure the accuracy of the information, it should not be relied upon as a substitute for legal advice tailored to your circumstances. We recommend that you seek independent legal advice before acting on any information contained herein.