The Instalment Contract Trap

It is rare that Buyers and Sellers will agree to enter into an Instalment Contract, which is an agreement to pay the purchase price in increments. Sellers particularly would find it undesirable as the Buyer is afforded substantially additional rights and powers as compared to a usual contract arrangement.  

On occasion, we see contracts that become instalment contracts, despite the intentions of the parties, due to the terms agreed at the time of the contract or during the conveyance.   

These traps include: 

  • A deposit amount that exceeds 10% (or in the case of a proposed lot – 20%); or 
  • An amount payable by the Buyer, regardless of whether or not the contract is lawfully terminated (often referred to as non-refundable). 


These traps can be well hidden. For example, a contract that initially began with a deposit amount (which represents 10% of the purchase price) may become an instalment contract if there is then an agreement to reduce the purchase price, rendering the deposit amount to be in excess of the 10% threshold. 

It is important to note that early release of the deposit has been held by the Supreme Court to not, in itself, render the contract an instalment contract. This would obviously be on the proviso that the (early-released) deposit is to be refunded if the contract is lawfully terminated. 

Are you looking to sell your home in Queensland or Victoria? If so, don’t hesitate to reach out. Ownit provides seamless and stress free conveyancing to buyers and sellers!

Settle it, anywhere, anytime with OwnIt

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Andrew Francey


Chief Operating Officer

Andrew has over two decades experience in high growth fast moving consumer goods, agribusiness and professional services. Supporting the Ownit team to deliver on client expectations, and implementing processes to scale the organisation, is a key focus for Andrew.

Andrew is a C-Suite leader with Chairman and Board experience.  He has formal qualifications in Business, Applied Finance and AICD Company Directors Course.

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