Conveyancing and Property Law: Your Deposit – What does this term really mean?

When reviewing the Sale and Purchase agreement with potential property purchasers, the term “deposit” often creates some confusion.

What does deposit really mean?

Well, it can mean different things to various people involved with your property transaction. This legal hint focuses on clarifying any confusion that may exist whether you are a first home buyer or moving to your next family home.

If the term deposit is used by the Real Estate Agent and referred to on the Sale and Purchase Agreement, this is the deposit or payment made by the purchaser of the property into the vendor’s lawyer’s or real estate agent’s trust account. This payment may fall due upon the contract becoming unconditional or upon the contract being signed. Whilst the deposit amount is usually 10% this is completely negotiable. You should be aware that an Auction Agreement for the purchase of a property will have defined deposit terms included within the contract and this deposit is usually payable on the fall of the hammer.

If the term deposit is used by the bank or your mortgage broker then this term usually has no relevance to the deposit payable under the Sale and Purchase Agreement. The term deposit used by your bank or broker refers to your contribution towards the property purchase i.e the difference between the property purchase price and the mortgage or loan amount. By way of example if your lender highlights that you require a 20 % deposit then this signifies that you will be required to have 20% equity in the property or to rephrase your lender is only prepared to give you a loan for 80% of the property purchase price. The remaining money will need to be provided by the legal entity which will own the property.

KiwiSavers who meet certain criteria are able to utilise their individual and employer contributions to go towards the purchase of a property. This offer is commonly termed a deposit subsidy and is usually advanced to the conveyancing solicitor on the day of settlement.

If you have any further questions regarding  conveyancing  and property law or your property deposit, please do not hesitate to contact one of our lawyers at Auckland law firm, Quay Law NZ.

Phone: (09) 523 2408


Address: Level 1, 427 Remuera Road, Remuera, Auckland.