Conveyancing And Release Of Deposit

A deposit is an important part of the conveyancing process. However, confusion regarding the deposit can lead to misunderstandings and other issues. An experienced conveyancing firm will know how to handle the deposit; however, it is still helpful to have a basic understanding about how the process works beforehand. Below, you will find some basic, clear information about what the law says regarding deposits.

The Basics -

The first thing that you need to understand is that there is no single "correct" way to return a deposit. The manner in which it proceeds will depend on the specifics of the situation. However, there is a handful of ways in which release of deposit is generally handled. By learning about these ways, you can more easily recognise if something is amiss during the process.

Settlement of Contract - Deposits are usually released to the seller once the contract has settled to everyone's satisfaction. After all, the deposit is designed to be a down payment, of sorts, on the property that the buyer would like to purchase. Most of the time, this is the way that the deposit is released. As with anything else though, exceptions may occur hence it is worthwhile to always study up a little on what is involved.

Default - Clause 2.4 of the REIQ Contract sets forth specific rules concerning default of contract. If the buyer defaults on the contract, the deposit is released to the seller. This is precisely why a deposit is made - to protect the financial interests of both parties. When a buyer defaults, it wastes the seller's time and money. The deposit can be used to recoup some of that. If the contract is terminated without default, though, the deposit is usually returned to the buyer. By reading Clause 2.4, you can get a much clearer idea about this situation.

Written Authorisation - Sometimes, deposit is released after both parties agree, in writing, to doing so. This could happen for any number of reasons. The important thing is that it is clearly defined and written out so that there is no confusion.

Disputes - The seller's solicitor or agent is charged with holding the deposit. If a dispute of any kind arises, he should hold the deposit in trust until it is resolved. Once both parties inform him that the dispute has been resolved, he may release the deposit.
Any situation that involves large sums of money can easily become tense. The deposit that is used in the conveyancing process is designed to alleviate some of that tension. Thought having a basic understanding on how deposits are released, you are more likely to experience a less confusing property transaction.