07 Feb 26 JULY 2010 – RELEASE OF DEPOSIT
Q.When and to whom is the deposit to be released by the deposit holder (stakeholder)?
A. There isn’t one answer to this question. It depends on the circumstances. Set out below are a few likely scenarios:
When a Contract is settled the deposit can usually be released to the Seller.
The deposit can also be released if both parties authorise. in writing, its release and nominate to whom it is to be paid.
Clause 2.4 of the REIQ Contract allows the deposit to be released to the Buyer if the Contract is terminated without default by the Buyer or if there is a default by the Buyer, the deposit is to be released to the Seller.
If there is a dispute as to who is entitled to the deposit:
1. A Seller or Buyer can give written notice of dispute to the deposit holder (which is generally the Agent or Sellers Solicitor). The deposit holder must then retain the deposit in their trust account.
2. Either party can then give notice to the deposit holder of the resolution of the dispute and to whom the deposit is payable or notice that legal action has been commenced to decide who is entitled to the deposit.
TIP: The deposit holder should always obtain confirmation in writing from both parties that a matter has settled, prior to releasing the deposit to a Seller.