About deposit bonds

home about apply contact

The benefit of deposit bonds: Tradesman building a house | woman discusses financial documents in new house

What is a deposit bond?

A Deposit Bond is used in lieu of cash for a deposit on the purchase of a property. The bond gives the Vendor security that can be converted to cash in the event the purchaser does not proceed with settlement of the property. The bond is NOT an insurance policy it is a form of Surety or Guarantee. The purchaser indemnifies QBE by way of an Indemnity.

What is an Indemnity?

An Indemnity is a written agreement that provides QBE a legal right to recover the amount of the bond from the purchaser in the event of default under the contract.

Does the purchaser pay the Deposit at Settlement?

Yes. The bond simply represents a deposit, it does not remove the obligation on the purchaser to pay the deposit at settlement.

When does the Bond terminate?

The bond terminates on the Expiry Date or when the contract for sale is completed, terminated or rescinded. In the event the purchaser fails to finalise settlement and the Vendor becomes entitled to terminate the contract, the bond terminates when QBE pays the deposit to the Vendor.

What are the advantages of a bond?

For a small premium a bond can be purchased for periods from 6 weeks to 4 years, depending on the settlement term of the property. The cash that would normally be used for a deposit can be invested until settlement arrives. Many people buy properties "off the plan" or that are under construction. Completion of the property can be months or even years away. The Deposit Bond ensures the purchaser secures the property without the burdensome outlay of a 10% cash deposit until the property is ready to settle.

Are vendors happy to accept Bonds?

Yes. The security provided by a major A+ Rated Financial Institution like QBE is much desired by Vendors as they have the comfort of knowing that, in the event the purchaser does not proceed with settlement, they get the deposit.

What happens in the event of a dispute between the Vendor and the Purchaser?

The bond is designed to provide convenience to the purchaser and security to the vendor. In this respect QBE are obliged to pay the deposit if the purchaser fails to proceed with settlement, regardless of any disputes or for whatever reason failure occurs. Once QBE has been reimbursed the bond amount by the purchaser, the purchaser is free to pursue recovery of any loss from the Vendor.

© 2012 Deposit Bond Australia Pty Ltd ABN 28003772487
Suite 4.02, 83 Kippax Street, Surry Hills NSW 2010 Phone: 1800 266 388 or (02) 9966 1044 Fax: (02) 9966 1320
General Terms of Use | Privacy Statement