The deposit is the most misunderstood pile of money in a property sale. Here's how it actually works in Queensland.
How much is a deposit?
Convention says ten per cent, but it's negotiable — five per cent is common, and contracts often split it into an initial deposit on signing and a balance when the contract goes unconditional. A bigger, earlier deposit signals a committed buyer, which is worth real negotiating weight to a seller.
Who actually holds the money
The deposit doesn't go to the seller. It's held in trust — typically in the trust account of the agency handling the sale or the seller's law firm — until settlement. Trust accounts are regulated and audited; neither party can touch the money while the contract is on foot.
What happens if the contract falls over
It depends on why. If the buyer validly terminates under a condition — finance declined, a failed building and pest — the deposit comes back to them. If a buyer simply walks away from an unconditional contract, the seller is generally entitled to the deposit (and potentially further damages). If termination is under the statutory cooling-off period, legislation sets what it costs the buyer. Your conveyancer will confirm what applies to your specific contract.
Deposit bonds: a deposit without the cash
A deposit bond is an insurer's guarantee that stands in place of a cash deposit until settlement, when the buyer pays the full price. They suit buyers whose money is tied up — in a property yet to settle, or a term deposit. Sellers can accept or refuse them; a bond is only as good as the issuer behind it, so they warrant a closer look than cash.
At settlement
The deposit is released and counts toward the purchase price, with the balance paid by the buyer's lender and their own funds. The trust holding simply ends — the money was always part of the price, just parked safely along the way.