$98,500. Two days late.
That's the story George Sourris from Empire Legal tells in his article about a Queensland buyer who agreed to pay a $98,500 deposit by a set date and paid it two days after. The seller terminated the contract and kept the deposit. According to George, the buyer lost both the property and the money. Read George's article here.
The detail that stuck with me: the buyer had asked the agent for more time and was told it was "all good". It wasn't.
As George explains, an agent's verbal OK doesn't change the contract. Most Queensland contracts make time 'of the essence', which means deadlines like the deposit date are essential terms. Only the seller (usually through their solicitor) can agree to extend them.
This is a legal story. But most late deposits have a money problem at the bottom of them. That's where we can help.
Why deposits end up late
George lists the usual suspects. I'd add a couple from the finance side:
- Daily transfer limits. Your bank might cap online transfers at $20,000 to $50,000 a day. A $90,000 deposit could take days to move.
- Bank security checks. A large transfer to a new payee can get held for a call-back.
- Weekends and public holidays. A transfer started on Friday afternoon may not land until Monday or Tuesday.
- Wrong trust account details. Always confirm by phone with a known number (more on this below).
- Money that isn't where you think it is. Funds in a term deposit, a redraw that needs a form or an offset account at a different bank.
- Misreading the deadline. "Within three days of the contract date" is not the same as "three business days".
How to plan your deposit
Here's what I suggest to clients before they make an offer:
- Know where every dollar of the deposit is coming from. Savings, offset, redraw, a gift from family or equity in another property. Each one moves at a different speed.
- Check your daily limit now. Ring your bank and ask. Many banks will lift it temporarily, but some need a day or two (or a branch visit).
- Get gifted money into your account early. If Mum and Dad are helping, ask them to transfer before you sign, not after.
- If equity is funding the deposit, sort it first. Releasing equity from your current home means a new loan or loan increase. That takes weeks, not days.
- Think about the deposit amount. Ten per cent is common but not compulsory. Your solicitor can help you negotiate a smaller initial deposit or a longer time to pay.
Hot Tip: George suggests negotiating the deposit clause to allow two or three business days to pay. I'd go further and do a test transfer of a small amount to the trust account the day you sign.
What if the cash just isn't there yet?
Sometimes the timing doesn't line up. The money is coming (from a sale, a term deposit or an equity release) but it won't arrive by the deposit date.
A few options to talk through:
- A deposit bond. An insurer or financial institution guarantees the deposit to the seller in place of cash. They cost a fee and the seller has to accept one. (We cover these in more detail in a separate article.)
- A smaller initial deposit with the balance paid later, if the seller agrees and it's written into the contract.
- Bridging finance if you're buying before selling.
Each of these has costs and trade-offs. The right one depends on your situation, which is exactly the conversation to have before you sign.
A word on scams
Moving a large deposit is exactly what scammers look for. Before you transfer, call your solicitor or the agent's office on a number you've found yourself (not one from an email) and confirm the account details. If the details change by email, stop and call.
In a nutshell
The $98,500 lesson is simple: the deposit date is a hard deadline and an agent can't move it for you. Plan where the money is coming from, check your limits and get it moving early.
If you're about to make an offer and want to work out how your deposit will come together, call us on (07) 3194 0888 or book a time online.
Thanks to George Sourris and the team at Empire Legal for permission to reference their work. Time Home Loans doesn't pay or receive referral fees for introductions to Empire Legal.
This article is general information only and does not take into account your objectives, financial situation or needs. It is not legal advice. Case details are as reported by Empire Legal. Lending criteria, fees and charges apply.
Frequently asked questions
Most Queensland contracts make time of the essence, so a late deposit can let the seller terminate. In the case Empire Legal describes, the buyer lost both the property and the $98,500 deposit.
No. An agent’s verbal OK doesn’t change the contract. Only the seller, usually through their solicitor, can agree to extend the deadline and it should be in writing.
Options include a deposit bond, a smaller initial deposit if the seller agrees or bridging finance if you’re buying before selling. Each has costs, so talk them through before you sign.
