Key takeaways for sellers
- The deposit isn't yours yet. The buyer's deposit — commonly around 10% — sits in a regulated trust account, not in your pocket, and is normally released at settlement. In Victoria there's a process to get it earlier.
- In Victoria you may be able to access it early. A section 27 “early release” can release the deposit before settlement if conditions are met and the buyer doesn't object.
- A 5% deposit or a deposit bond isn't the same as 10% cash. Accepting less, or a bond instead of cash, changes what you actually hold if the buyer defaults.
What is the deposit, exactly?
The buyer's skin in the game. It's part of the purchase price, not on top of it, so it comes off what they owe you at settlement.
What it isn't is your money. Not yet. The deposit goes into a regulated trust account — usually the agent's, sometimes your conveyancer's — and sits there until settlement. Whoever holds it can't hand it to either side on their own say-so.
How much is the deposit, and when is it paid?
Around 10% is the convention, but it's a contract term, not a law. You can agree to less.
At auction, the deposit is payable on the fall of the hammer. By private treaty it's usually paid when contracts are signed, sometimes as a small holding deposit first with the balance to follow.
Is a holding deposit the same as the deposit?
When a buyer makes an offer, an agent may take a small holding deposit — a few thousand dollars — as a show of good faith. It's usually refundable and it isn't the deposit under your contract.
The deposit that counts is the one the contract calls for. And what it does — when it's payable, what happens if it's late, whether you can terminate — is set by the contract terms, not by the money itself. In one Queensland case a buyer lost a $98,500 deposit because it landed a day late and the contract made timely payment an essential term. The agent's say-so didn't save them.
So read the deposit clause properly before you sign, and don't let anyone vary it informally.
When do you actually get the deposit?
At settlement, in the normal course. The agent's commission and marketing costs typically come out of it first, and the balance flows to you with the rest of the proceeds.
If the sale falls over, where the deposit goes depends on why. A buyer who lawfully cools off gets it back less the penalty. A buyer who simply defaults may forfeit it.
One thing that surprises people: if the sale falls over and you and the buyer disagree about who gets the deposit, whoever holds it can't just pick a side. It stays in trust until you both authorise its release in writing, or a court orders it. That can take a while.
Who gets the interest on the deposit?
Deposits sit in a statutory trust account, and by law the interest on those accounts goes to a government fund — the one that compensates people when an account holder misuses trust money. Not to you, and not to the agent.
The exception is if you and the buyer agree to have the deposit invested in a separate account for your benefit. That's worth doing on a long settlement, like off the plan. On a six-week settlement the interest can be smaller than the admin fee.
The agent's commission and marketing costs usually come out of the deposit at settlement, before the balance reaches you. Nothing untoward in that, but the deposit figure and the amount you actually receive from it are two different numbers.
What if the deposit isn't 10% cash?
Two variations come up often, and both leave you holding less than you might think.
A 5% deposit. Buyers stretched on cash sometimes offer 5%, occasionally with the balance payable later. If they default, you can generally forfeit what was actually paid. Recovering the rest, where the contract says 10% but only 5% landed, is a harder argument and can be contested.
A deposit bond. A guarantee from an insurer, not money. Nothing sits in trust. If the sale settles it falls away and the buyer pays in full. If the buyer defaults you claim on the bond, which is a process rather than a balance you already hold.
Worth knowing either way: the forfeited deposit isn't necessarily the limit of what you can recover. Under a standard Queensland contract a seller can forfeit the deposit and sue for damages — the shortfall if the property resells for less, holding costs, legal fees. The deposit is the fastest remedy, not the only one. We cover that in detail separately.
Can you get the deposit early in Victoria?
Section 27 of the Sale of Land Act lets a Victorian seller ask for the deposit before settlement. Genuinely useful if you're buying your next place and need those funds for the deposit on it.
It only works if the contract is unconditional — every finance, building and pest or due diligence clause satisfied or waived. You then serve a section 27 statement disclosing any mortgage on the property and its payout figure, plus any caveat on the title. The buyer has 28 days to object in writing. If they don't, consent is deemed and the deposit can be released.
Two things commonly stop it. If the payout figure is more than about 80% of the sale price, expect an objection — the buyer's safety margin is gone. And off-the-plan contracts aren't eligible.
Get the statement right. Courts have struck down attempts to shorten that 28-day window by special condition, and an inaccurate figure can sink the release.
A change is coming. The Consumer Legislation Amendment Bill 2026 would repeal section 27 and replace it with a contractual approach: no early release unless your contract expressly allows it, agreed with the buyer up front. The Bill passed the Legislative Assembly on 30 July 2026 and is now before the Legislative Council. It isn't law yet, but if you're selling in Victoria from 2027, early release becomes something you negotiate into the contract rather than apply for afterwards.
New South Wales and Queensland have no equivalent statutory process — early release there depends on what the contract says.
What does the deposit tell you about the buyer?
A full deposit paid on time is a reasonable sign of a committed buyer with their finances in order. It isn't a guarantee of settlement. Money sitting in trust doesn't make the contract unconditional — finance, building and pest, or a sale-of-own-property condition all still have to be met.