In today’s heated real estate market where it seems sellers have the upper hand. Real estate agents are encouraging people to immediately sign contracts and pay deposits.
Are house deposits refundable?
I recently have been asked when is a deposit refundable. Unless specifically stipulated in a contract a deposit is not refundable. In New South Wales every residential contract provides a cooling off period. For an existing property it is five (5) business days and for an off the plan property it is 10 business days. The cooling off period was introduced to allow for people to exchange contracts on the payment of a non-refundable 0.25% of the purchase price then undertake such matters as the review of the contract, building and pest reports and most importantly obtaining final approval of finance.
If for some reason the property is found unsatisfactory or finance not forthcoming the vendor has to be advised in writing by 5.00 pm on the fifth business day, otherwise the contract must proceed and the balance of the deposit paid. By agreement a cooling period may be amended or be waived by the provision of a 66W certificate by your solicitor. This certifies that you have been provided legal advice as to:
(i) the effect of the contract for the purchase of that property;
(ii) the nature of the certificate;
(iii) the effect of giving this certificate to the vendor, that is, that there is no “Cooling‑Off Period” in relation to the contract.
Unless specifically provided for in the contract for the sale of a residential property, a deposit is not refundable and a property is not sold until the contracts are signed and exchanged.