What if I accept less than 10% deposit when selling my property?

by Lisa Biddle | Jun 3, 2023 | Conveyancing

When selling a property, usually a sum of 10% of the purchase price is paid as a deposit by the Purchaser. Recently, however, the acceptance of 5% deposits are becoming more acceptable, especially as property prices have increased.

Is there a risk to you as a Vendor if a 5% deposit is excepted?

The main risk associated with accepting a deposit of less than 10% is that if the purchaser defaults, you may not be able to claim the full 10% deposit as compensation.

Often, as a common practice, a Special Condition can be included in a Contract for Sale which states that if the deposit is less than 10% and if the purchaser, by its default, fails to complete the purchase, the deposit is forfeited to the Vendor and the purchaser must also pay to the Vendor the balance of the agreed 10% deposit. Unfortunately there is much uncertainty from the Courts as to whether such a clause is enforceable. Fortunately, default by a Purchaser is a rarity in a property transaction.

But is there a benefit to the Vendor if a 5% deposit is excepted?

Yes! You may have a purchaser that has offered you the price you are looking for however, does not have the cash available for the full 10% deposit. In doing this you are removing the risk of not selling the property or receiving the asking price for the property.

If it is known that you may accept a deposit of less than 10%, this increases the number of potential purchasers that may make offers on your property. In turn, this can result in achieving a higher purchase price, particularly at auctions. The more people making offers or bidding at auction for your property, the greater chance of securing a great sale price.

If you need legal assistance, contact Everingham Solomon’s team of experienced Solicitors because Helping You is Our Business.

Click here for more information on Lisa Biddle.

Premium Stamp Duty – What is it and when is it payable??

by Lisa Biddle | Feb 11, 2023 | Conveyancing

Stamp duty (now called transfer duty in NSW) is a tax imposed by the NSW Government upon the transfer of the title to a property from a Vendor to a Purchaser. Transfer duty must be paid when you buy any property in NSW whether it be your home, holiday home, investment, vacant land, or faming properties.

Generally, stamp duty must be paid on the earlier of the following:

1. Completion of the Contract (also called settlement); or
2. Three (3) months from the date of exchange of Contract

In New South Wales, “premium stamp duty” may be payable, in addition to transfer duty, on properties that attract a higher value. The purpose of premium stamp duty is to raise additional revenue from high-value properties.

Premium duty is calculated as a percentage of the value of the property above a specified threshold. Each year the threshold for premium duty is adjusted in accordance with CPI. The rate of premium stamp duty varies based on the value of the property and is applied for residential properties worth more than $3,268,000.00. Premium Duty does not apply on properties that are rural.

The same timeframes for payment of premium duty are applicable in terms of when stamp duty is payable. Revenue NSW provides a number of online calculators so you can determine stamp duty payable on your property transaction.

If you need legal assistance, contact Everingham Solomon’s team of experienced Solicitors because Helping You is Our Business.

Click here for more information on Lisa Biddle.