Is it normal for a vendor to request release of deposit?

Hi there

trying to negotiate a deal in QLD and the vendor's agent is suggesting the vendor is not taking our offer seriously and what might help is to sign a 20% deposit down, releasable to the vendor when the contract goes unconditional. Does this sound dodgy? I guess once the contract goes unconditional it doesn't really matter if the vendor gets the deposit?

Thanks in advance,
jerkygirl

 

Sounds pretty dodgy to me... if the vendor needs the money and you/your bank are ready I'd simply negotiate a shorter settlement.

I wouldn't want to release any money until I know settlement has occurred...

 

I've had vendors request the release of the deposit and my conveyancer/solicitor's advice is always "no".

 

Thanks Marty thats what I thought. I will suggest a shorter settlement after I discuss with my bank.

 

Thanks Mavis

 

Shorter settlement is better.

Also 20% deposit is massive, typically 10% is what is asked but you can usually easily negotiate to 5% or even lower.

Most of the time the agent won't consider your deposit low if it covers their costs.

 

What if they don't or cannot settle?

 

Hi Jerkygirl

Is the purchase a new apartment off the plan ? I ask because under state legislation thats the only way an agent/seller can accept a deposit of greater than 10% or it becomes an installment contract.

 

I'm not sure about QLD, but in VIC I don't believe they can accept more than a 10% deposit.

It's not uncommon for a request for the deposit to be released. Keep in mind that if you don't release it, the vendor probably won't be very accommodating for pre-settlement inspections, renovation quotes, etc.

 

Never heard of deposit being released in Qld.
What if property does not settle?
Marg

 

Hi there,

no it is an established house. cheers

 

Hi Terry,

In what scenario would it not settle, if our finance/bank is all lined to complete the sale?

Thanks...

 

the vendor dies is the easiest one.

 

Many reasons
1. they refuse
2. Someone else registers a writ etc on title before you
3. bankruptcy
3. insanity
5. death

(either party)

 

The balance of the sale proceeds may also not be sufficient to pay out their lender and thus their lender could refuse to release title. Thus no settlement.

 

Thanks all for the clarification, clearly not a good idea. I will find another negotiation carrot for them instead

 

You're welcome. It's good that brokers and solicitors (@Peter_Tersteeg and @Terry_w) have given you examples too as they'd see a cases of when things run into strife.

As has been mentioned, in VIC if you go above 10% deposit in VIC it becomes a different kind of contract.

 

Agree with the above. No, never release deposit to vendor. Nothing is done deal until settlement day and keys released.

 

I remember the opposite scenario. I had exchanged (in NSW) my house, which was I'd just made vacant at the time. This was no 2 bedroom walk up, but a very well renovated house in perfect condition. Purchasers wanted unsupervised access pre final settlement. I said sure you can access 100% of my house, but I want access to the 10% deposit. They said no way. OK- so you want to access 100% of my asset, but not release the 10% deposit? I guess you can see I wasn't that keen to assist them.