GRA Blogs

Articles by John Rowe

John Rowe

Early Release of Real Estate Deposits: A Warning


In these tougher times we have noticed Vendors asking for early release of deposits before actual settlement has taken place.  If you have purchased a property and paid a deposit on the unconditional date, we would recommend you think twice  before agreeing (and don’t) to any request to release your deposit before settlement.

When a deposit is paid, the real estate agent is required to hold it for 10 days.  Vendors often ask agents to release the deposit early to use it as a deposit on another house or to clear some debts etc.  The agent can do this provided the purchaser consents.

Be very wary of agreeing to the release because the transaction may not settle (especially in today’s environment!).  If the transaction does not settle and the vendor has already spent the deposit, you will have no security and your deposit may be gone forever.

Ensuring that the deposit is held by the Real Estate Agent until settlement is the wise thing to do; especially where there is a mortgage on the title.  If there is a mortgage, be aware that the deposit might be needed to settle the Vendor’s mortgage debt, and if released early and spent in other ways, the Vendor might not be able to discharge the mortgage.

Always be very wary of any request to release a deposit early.


John Rowe
Director
Business Accounting Services
© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
Testimonials
Thanks for a great night at your property information seminar last night. Both my husband and I thoroughly enjoyed what Matthew had to talk about and we learnt a great a lot. We have recently joined GRA for our accounting services and are in the process of changing structures with trusts etc. Whilst its only early days everyone so far we have dealt with has been fantastic and we feel we are in great hands with GRA to not only manage our affairs but to also help to grow our wealth moving forward. We look forward to joining you at property school next year! - Amanda C, November 2018
We can help
Here's how
Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.

  • How to find the right property
  • How to negotiate successfully.
  • Renovation do's & don'ts.
  • Property management.
  • Case studies and examples.
  • and much, much more..
TOP