Because the bank is going to lend 100% (enough equity and income, no deposit required), on the S & P agreement, I want to put nil as deposit. Is this unusual? If there must be a figure, can I put $50? Once the offer become unconditional, I pay $50. Is this allowed? The property is $390K

secretgarden88 - 2021-02-19 20:40:00

We bought a house last year, and just crossed out the bit about the deposit. The vendors agreed and we paid the full amount on settlement.
But its up to the vendor I think, doesn't matter if you're borrowing 100%, the vendor may want the deposit when the contract becomes unconditional.

kateley - 2021-02-19 20:46:00

You can do what you
Want but the vendor
Would be foolish
To accept
So
Will sell to
Someone else

sparkychap - 2021-02-19 20:51:00

Are you trying to write in haiku again, Sparky?

cinderellagowns - 2021-02-19 21:20:00

secretgarden88 wrote:

Because the bank is going to lend 100% (enough equity and income, no deposit required), on the S & P agreement, I want to put nil as deposit. Is this unusual? If there must be a figure, can I put $50? Once the offer become unconditional, I pay $50. Is this allowed? The property is $390K

if you are using equity, then that is effectively the “deposit” as far as the bank is concerned and they aren’t lending 100%.

sparkychap - 2021-02-20 07:36:00

cinderellagowns wrote:

Are you trying to write in haiku again, Sparky?

i showed it to a Japanese friend who told me it was “fourku”

sparkychap - 2021-02-20 07:37:00

secretgarden88 wrote:

Because the bank is going to lend 100% (enough equity and income, no deposit required), on the S & P agreement, I want to put nil as deposit. Is this unusual? If there must be a figure, can I put $50? Once the offer become unconditional, I pay $50. Is this allowed? The property is $390K

not unusual to put nil deposit, do what you like, deposits are to feed the cockroaches early.

gabbysnana - 2021-02-20 08:37:00

gabbysnana wrote:

not unusual to put nil deposit, do what you like, deposits are to feed the cockroaches early.

nah the lawyers get paid later anyway.

sparkychap - 2021-02-20 08:48:00

sparkychap wrote:

nah the lawyers get paid later anyway.

She meant real estate agents I believe - they deduct their commission from the deposit and only pay the balance to the lawyers

sarahb5 - 2021-02-20 09:33:00

sarahb5 wrote:

She meant real estate agents I believe - they deduct their commission from the deposit and only pay the balance to the lawyers

Really? You don't say....

And if no deposit is paid, they still claim their commission at the same time.

sparkychap - 2021-02-20 09:36:00

sparkychap wrote:

Really? You don't say....

And if no deposit is paid, they still claim their commission at the same time.

No they get their commission on settlement

sarahb5 - 2021-02-20 09:45:00

sarahb5 wrote:

No they get their commission on settlement

Not by default. Of course, the vendor can negotiate that.

sparkychap - 2021-02-20 09:48:00

sparkychap wrote:

nah the lawyers get paid later anyway.

.

johnston - 2021-02-20 10:35:00

Usually the agents want enough to cover their commission. Else they have to wait till settlement. I wouldn't be at all happy nil deposit as a vendor.

pcle - 2021-02-20 12:37:00

pcle wrote:

I wouldn't be at all happy nil deposit as a vendor.

Why?

The contract is more binding than the deposit. There are very few conditions that allow any or all of the deposit to be retained if the deal does not go through.

Truly it is more usually the agent who wants it, to get their mitts on the commission.

tony9 - 2021-02-20 14:41:00

tony9 wrote:

Why?

The contract is more binding than the deposit. There are very few conditions that allow any or all of the deposit to be retained if the deal does not go through.

Truly it is more usually the agent who wants it, to get their mitts on the commission.

Rubbish. If the purchaser refuses or fails to complete when the vendor is ready to do so, the vendor can cancel the agreement and retain the deposit.

ETA As long as its not more than 10% of the purchase price.

Edited by sparkychap at 3:36 pm, Sat 20 Feb

sparkychap - 2021-02-20 15:22:00

tony9 wrote:

Why?

The contract is more binding than the deposit. There are very few conditions that allow any or all of the deposit to be retained if the deal does not go through.

Truly it is more usually the agent who wants it, to get their mitts on the commission.

And if the buyer defaults - what ya gonna do - Sue?
Good luck with that.
If you have the deposit - 10% at least - keep it.
The buyer can cry and gnash their teeth and try suing you.
It's more about reality than theory - but feel free to learn the difference.

pcle - 2021-02-21 09:18:00

gabbysnana wrote:

not unusual to put nil deposit, do what you like, deposits are to feed the cockroaches early.

What an awful thing to say, not all real estate agents are dodgy, most work very hard for their money and they dont earn as much as you think they do from the commission paid by the seller. They too have to pay bills and need to feed their families, dont tar all with the same brush because you have obviously dealt with a bad one.

sellontrademe - 2021-02-21 12:00:00

pcle wrote:

If you have the deposit - 10% at least - keep it.

You cannot keep a deposit that is more than 10% of the purchase price.

sparkychap - 2021-02-21 12:55:00

pcle wrote:

And if the buyer defaults - what ya gonna do - Sue?
Good luck with that.
If you have the deposit - 10% at least - keep it.
The buyer can cry and gnash their teeth and try suing you.
It's more about reality than theory - but feel free to learn the difference.

Treat this as a learning exercise pcle.

And if the buyer defaults - what ya gonna do - Sue? If there is a loss then yes, either for damages or specific performance.

Good luck with that. Nothing to do with luck. The law is well established.

If you have the deposit - 10% at least - keep it. No, never get more than 10% as deposit and while the vendor can keep their balance of the deposit the agent is also entitled to their commission.

The buyer can cry and gnash their teeth and try suing you. And might succeed if the vendor was at fault.

It's more about reality than theory - but feel free to learn the difference. It is frequently litigated notwithstanding that when one party is clearly at fault it is generally settled without going to court.

So that's a big fat 0 to you pcle.

johnston - 2021-02-21 13:15:00

For my house purchase, my offer of $1000 was accepted as a deposit ????

rua69 - 2021-02-21 14:48:00

gabbysnana wrote:

not unusual to put nil deposit, do what you like, deposits are to feed the cockroaches early.

No not just the 'cockroaches'. Its also common for the vendor to request from the purchaser an early release of the deposit to enable the vendor to use the paid deposit as their deposit on there next purchase. I did it last week as the vendor.

orphic1 - 2021-02-21 16:03:00

well I don't know if I got lucky or not but brought 2 houses one with no deposit and the other with 5k.Needless to say both went though with no problems. It wasn't on 100% finance though.

Edited by differentthings at 6:31 pm, Sun 21 Feb

differentthings - 2021-02-21 18:30:00

differentthings wrote:

well I don't know if I got lucky or not but brought 2 houses one with no deposit and the other with 5k.Needless to say both went though with no problems. It wasn't on 100% finance though.

The vendors got lucky.

johnston - 2021-02-21 20:16:00

sellontrademe wrote:

What an awful thing to say, not all real estate agents are dodgy, most work very hard for their money and they dont earn as much as you think they do from the commission paid by the seller. They too have to pay bills and need to feed their families, dont tar all with the same brush because you have obviously dealt with a bad one.

100% agree
Ignore nana - always negative never a nice thing to contribute
I would never accept a deal with no deposit, the way the market is right now
You wouldn’t need to

Edited by alfa13 at 6:27 am, Mon 22 Feb

alfa13 - 2021-02-22 06:24:00

sparkychap wrote:

You cannot keep a deposit that is more than 10% of the purchase price.

Is that in the standard S&P?

pcle - 2021-02-22 07:28:00

pcle wrote:

Is that in the standard S&P?

No and the risk of a deposit greater than 10% is losing entitlement to the entire deposit. Any payment greater than 10% should be structured as part payments.

johnston - 2021-02-22 07:47:00

johnston wrote:

No and the risk of a deposit greater than 10% is losing entitlement to the entire deposit. Any payment greater than 10% should be structured as part payments.

My earlier post is incorrect. The no should be a yes as per the current edition of the ASP.

Edited by johnston at 9:45 am, Mon 22 Feb

johnston - 2021-02-22 09:44:00

pcle wrote:

Is that in the standard S&P?

it's in the latest version but just codifies existing legal precedent.

11.4 If the purchaser does not comply with the terms of the settlement notice served by the vendor then, subject to subclause 11.1(3):
(1) Without prejudice to any other rights or remedies available to the vendor at law or in equity, the vendor may:
(a) sue the purchaser for specific performance; or
(b) cancel this agreement by notice and pursue either or both of the following remedies, namely:
(i) forfeit and retain for the vendor's own benefit the deposit paid by the purchaser, but not exceeding in all 10% of the purchase price; and/or
(ii) sue the purchaser for damages

sparkychap - 2021-02-22 09:45:00

(snap!)

sparkychap - 2021-02-22 09:53:00

So at least a 10% deposit is a very good idea.
Unless hard to sell in a buyers market when any offer is desperately wanted.

Edited by pcle at 11:30 am, Mon 22 Feb

pcle - 2021-02-22 11:30:00

pcle wrote:

So at least a 10% deposit is a very good idea.
Unless hard to sell in a buyers market when any offer is desperately wanted.

No, see the above posts.

sparkychap - 2021-02-22 11:38:00

sparkychap wrote:

No, see the above posts.

Yeah, Nah.
Still nuts to sell without the buyer paying a deposit.

pcle - 2021-02-22 14:56:00

pcle wrote:

Yeah, Nah.
Still nuts to sell without the buyer paying a deposit.

never said you should. Just no benefit to taking more than 10% and a risk as J mentioned above.

sparkychap - 2021-02-22 15:00:00

When using equity most people can arrange either a draw down on their facility or a temp overdraft for the initial deposit.

jeffqv - 2021-02-22 15:01:00

The member deleted this message.

mrcat1 - 2021-02-22 17:01:00

johnston wrote:

No and the risk of a deposit greater than 10% is losing entitlement to the entire deposit. Any payment greater than 10% should be structured as part payments.

Why no more than a 10% deposit?
Why would the vendor loss entitlement to a greater than 10% deposit when they will get paid it after settlement anyway?

mrcat1 - 2021-02-22 17:04:00

mrcat1 wrote:

Why no more than a 10% deposit?
Why would the vendor loss entitlement to a greater than 10% deposit when they will get paid it after settlement anyway?

It was the common law position, perhaps for a century or longer, and the principle is now incorporated into the ASP. Why? Apart from what I have posted earlier I don't really know. When you think about it anything more than 10% could easily be classified as part payment not a deposit. Deposits may be retained but not part payments without the intervention of the courts.

johnston - 2021-02-22 17:48:00

johnston wrote:

It was the common law position, perhaps for a century or longer, and the principle is now incorporated into the ASP. Why? Apart from what I have posted earlier I don't really know. When you think about it anything more than 10% could easily be classified as part payment not a deposit. Deposits may be retained but not part payments without the intervention of the courts.

Thanks.

mrcat1 - 2021-02-22 17:52:00

johnston wrote:

It was the common law position, perhaps for a century or longer, and the principle is now incorporated into the ASP. Why? Apart from what I have posted earlier I don't really know. When you think about it anything more than 10% could easily be classified as part payment not a deposit. Deposits may be retained but not part payments without the intervention of the courts.

I also think there was something around it being considered overly punitive. The vendor can still due for actual loss above the 10%.

sparkychap - 2021-02-22 18:21:00

sparkychap wrote:

I also think there was something around it being considered overly punitive. The vendor can still due for actual loss above the 10%.

I thought I had posted that but apparently not. That is my understanding too. Losing 10% is fair, losing more as of right is punitive.

johnston - 2021-02-22 18:45:00

the bank will give you a temporary over draft to pay the 10 percent and then it will be cleared at settlement

mansonprincess - 2021-02-22 19:27:00