What’s My Name and Where Did My Deposit Go?
24 November 2022
Buying a property can be the largest transaction that many people enter into in their lifetime. It can be stressful and worrying if you are not prepared.
Whilst they may seem to be the simplest of matters, two of the most common problems that we encounter when it comes to property transactions are:
- The name on the contract; and
- What happens with the money you pay the agent as a deposit.
What is Your Legal Name
When entering into a contract to purchase a property, you must ensure that your full and proper legal name is written on the contract. This is the name that appears on your driver’s license, passport or birth certificate. For example, you may be known to everyone as Bob Citizen yet your proper name is Robert. In this case, Robert is what must go on the contract.
Other important points to note:
- Middle names must be included on a contract for a land purchase;
- Initials will not suffice; and
- If you are purchasing in a trust, both the trustee entity and the trust should be written on the contract or at a very minimum, the trustee entity and ‘as trustee’ should be written on the contract.
When you sign a contract to purchase property you will normally be required to pay a deposit to the Real Estate, or to the Seller’s Solicitor if there is no Real Estate Agent involved.
Firstly you must pay your deposit on time. Failure to pay the deposit within the terms specified in the contract may result in the seller having a right to terminate the contract due to you being in breach.
As a purchaser of a property your deposit will be deducted from the total amount that you have to pay at settlement, for example, if the property costs $200,000 and you paid a $5,000 deposit then the balance that you have to pay will be $195,000 plus or minus whatever rates and water charges and so forth might be calculated as part of the final settlement figures.
As a seller of a property, if you have engaged a Real Estate Agent to sell your property then you will owe them a commission fee for their work as the agent. If they are holding a deposit from the buyer they will deduct this from what you owe them, for example, if the Real Estate sold your home for $200,000 and their Commission was $6,600 and they were holding a deposit of $5,000 then you would only owe them the balance of $1,600 for their fees. If there is no agent involved and the Solicitor is holding the deposit amount then this amount will be released to you, the seller, at settlement with all of the other funds from your sale.
If you enter a contract to buy a property, you have paid a deposit and the contract is subject to conditions such as obtaining finance approval from your bank or being satisfied with your building and pest inspection then you will have the option to terminate the contract if you cannot meet these requirements. If you terminate the contract within the time frames specified in the contract then your deposit will be refundable in full.
Failure to comply with the terms of the contract may mean that you are in breach of the contract and depending on the terms of the contract may result in the loss of your deposit.