Exchanging With A Deposit Bond

It is a common occurrence for purchasers to seek to provide a deposit bond in place of a cash deposit on the exchange of a contract for sale of land. When dealing with these situations there are a few pitfalls for agents to avoid. An example would be attending to exchange of the contracts with a deposit bond without the prior approval and authority from the Vendor.

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Exchanging Contracts Without The Full Deposit

In the current property market, it is not always possible for purchasers to have the full 10% deposit required to be paid on the exchange of contracts. In these circumstances a part deposit can be agreed upon, however, Agents need to be careful that they do not go beyond the scope of the authority given to them in making these changes in the contract. In doing so they may place themselves in a position where they may be made liable.

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Handling Deposits

As a result of the role an agent plays in the sale and purchase of property they are given the authority to participate in the exchange of contracts and do so on a regular basis.  Incidentally they are also given the authorisation to act as a stakeholder and to receive and hold deposits. The importance of the role they play in this process places duties and obligations upon them which will need to be properly discharged. The contract for the sale of land requires a ten percent deposit and problems will arise where a lesser amount is received on exchange. This makes agents potentially liable to a damages claim in the situation where the Purchaser is unable to complete. As this is a common occurrence, there are things agents can do to ensure they are protected.

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Price substantiation & True estimates on Agency Agreements

Under the Fair Trading Supervision Guidelines, agents must be able to substantiate the selling price inserted on their agency agreements. Please click below to watch our short video on factors that agents should consider when substantiating price and the Best Practices to follow.

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Authority to sign a contract on behalf of a party

Often a situation will arise whereby all parties who are purchasing a property will not be able to all attend on the date of the auction. When circumstances like this arise, agents need to be aware that a written authority to bid on the property & to sign the contracts on the parties behalf must be obtained and kept as part of the documentation as part of the bidders register.

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