An alternative to a cash deposit is a deposit bond or bank guarantee. They can be used to substitute a cash deposit in case the buyer’s cash is tied up in other investments and is not easily accessible. For instance, the buyer may have their cash deposit tied up in shares, a term deposit account or equity in another property. This simply means that the buyer pays the full purchase price on settlement. The seller’s conveyancer will hold the deposit bond or bank guarantee on their file until settlement.
Deposit bonds and bank guarantees are widely used and accepted as approved deposits to secure a property. A deposit bond or bank guarantee reassures the seller that they will receive the amount of the deposit (10% of the purchase price) if the buyer defaults in their performance of the contract.
There are general criteria to obtain a deposit bond:
unconditional loan approval from an approved lender (valuation is the only allowable condition)
a copy of the signed and dated contract for sale
the maximum amount of the deposit bond is up to 10% of the purchase price
- the appropriate application form to be completed and executed by all buyers and the relevant fee paid
Both short and long term guarantees are offered to suit any settlement period. Our office is authorised to issue deposit bonds through Aussie Deposit Bonds who pay us a fee for completing the online application on your behalf. If you would prefer to utilise a deposit bond please let us know.
Contact us to discuss your specific requirements!
Disclaimer: The content of this publication is for reference purposes only and should not be relied upon as legal advice. Specific legal advice should always be sought to take into account your individual circumstances.