Deposit Bonds

How does a deposit bond work? Deposit bonds are a simple, efficient and inexpensive alternative to cash or bridging finance deposits when purchasing property. When a person buys a house or unit to occupy or for an investment, they are required to pay an immediate deposit (usually 10%) of the purchase price to the vendor in order to exchange contracts. A deposit bond is a guarantee that acts as an interim substitute for a cash deposit, meaning the payment of the deposit can be made at the time of settlement rather than immediately upon purchase.

Private Treaty (Non Auction)

1. Determine property to be purchased and agree price with agent/vendor. 2. Ensure sufficient purchase funds will be available for contract completion (finance approved, existing funds to be available, definite sale of current property). 3. Apply for Deposit Power Guarantee including copy of contract and other required information. 4. Deposit Power Guarantee approval issued. 5. Sign contract including deposit guarantee details and any other conditions. 6. Deposit Power Guarantee given to Stakeholder (Real Estate Agent/Solicitor) as deposit commitment. 7. Contracts exchanged (properties in Victoria only, not required for other States or Territories). 8. Settlement occurs with full purchase price being paid, including amount represented by the Deposit Power Guarantee. 9. Property is now yours to Enjoy!

Auction

1. Ensure sufficient purchase funds will be available for contract completion (finance approved, existing funds to be available, definite sale of current property). 2. Conduct any necessary checks prior to auction. 3. Ensure that auctioneer and vendor are prepared to accept a Deposit Power Guarantee at least 2 days prior to auction. 4. Apply for Deposit Power Guarantee including copy of contract and other required information. 5. Deposit Power Guarantee approval issued. 6. Successfully bid at auction. (If not, Deposit Power Guarantee is still valid for other auctions). 7. Sign contract including deposit guarantee details. 8. Deposit Power Guarantee given to Stakeholder (Real Estate Agent/Solicitor) as deposit commitment. 9. Contracts exchanged. 10. Settlement occurs with full purchase price being paid, including amount represented by the Deposit Power Guarantee. 11. Property is now yours to Enjoy!