What are deposit bonds?
Deposit bonds are a guarantee that acts as a substitute for a cash deposit required when exchanging contracts for the purchase of a property. The guarantee states that payment of all or part of the deposit will be made at the time of settlement and the value of the bond is capped at a maximum 10% of the purchase price of the property. The bond issued to the vendor for all or part of the deposit required (up to a maximum of 10% of the purchase price).
At settlement the purchaser is required to pay the full purchase price including the deposit. If you do not proceed with the purchase, and default under the Contract of Sale you may be liable to forfeit the deposit, then the vendor can claim the bond amount from the Insurers. If this occurs, the Insurer will then recover the money from the purchaser.
Who can apply for a bond?
Any purchaser of a property including:
* Property owners who wish to change homes
* Investors who wish to expand their property portfolio
* First Home Buyers
Can I use the bond at auctions?
A deposit bond gives you the flexibility to bid on a property without a cash deposit at auctions. The maximum bond amount is fixed but not the property details so you can attend a number of auctions, and can be issued prior to the auction. Once you have purchased the property, you can complete the vendor and property details on the bond.
Are Vendors willing to accept the bond?
Deposit bonds are quick too and can be organised within 24 hours. Major insurance companies provide the security behind the bond, which will give comfort to the vendor which means contracts can be exchanged. Deposit bonds are readily accepted by vendors and are available throughout Australia.
Do I still have to pay the deposit at settlement?
Yes - the bond is only a substitute for the cash deposit required when exchanging contracts of sale. The value of the bond must be paid to the vendor at the contract settlement date.
What happens if I default under the contract of sale?
If you default under the contract of sale the vendor may claim the bond amount from the Insurer. Should this occur, the Insurer will pay to the Vendor the amount of the deposit. The insurer will then recover the deposit amount from you as well as any costs.
When does the bond terminate?
The bond terminates when
a) The Contract of Sale is settled, or
b) The Contract of Sale is cancelled by mutual arrangement.
c) The Insurer pays a claim, or
d) The vendor terminates or rescinds the contract.
e) On expiry of the Bond
Can I get a refund if I don’t use the bond?
Yes. If you return the unused, original bond within 30 days of issue the fee will be partially refunded. After deducting a $110 (incl. GST) administration charge, a cheque for the balance will be mailed to you. A $110 (incl. GST) application fee applies to each application.
How can I apply for a deposit bond?
Simply contact Lescorp.
We accept payment by credit card or EFT. Alternatively you can pay by cheque which should be made payable to bonds and must accompany your application.
Important Notice
Lesina Corporation Pty Ltd (ACN 114 039 324) trading as Lescorp (ABN 25 114 039 324)
(Lescorp is acting as agent for the issuer of the Lease bond; Lescorp will then assess the application in accordance with its underwriting requirements.
In arranging a bond on our behalf, Lescorp may receive a commission. You may arrange a bond with the insurer of your choice.