I'm just reviewing a contract of sale for a property that I'm interested in. I can see a special condition relating to ‘release of deposit’. What does this mean and what implications does it have for me as a purchaser?
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Answer by Neha Sharma, Hillsdale 2036 NSW
- A release of deposit clause means that the deposit paid by you (the purchaser) at exchange of contract can be used by the vendor prior to settlement for the purpose of making a deposit on another property or for payment of stamp duty on a property being purchased by the vendor.
- You would be strongly encouraged to request removal of this clause from the contract of sale as protects only the interests of the vendor and has the potential to put you in a difficult financial situation if something goes wrong between exchange of contracts and settlement.
- If at a later stage the contract is rescinded recovering the deposit can be a lengthy and expensive process.