There are many scenarios when a purchaser may need a deposit guarantee to assist in securing their new home or investment property. Purchasers often find themselves in a situation where they have the ability to settle on a property, however may not have the cash readily available to put a deposit down. Some common scenarios include:

• Buying and selling simultaneously
• Investors borrowing the full purchase price
• First Home Buyers who do not have the full 10% cash deposit
• Downsizers with all their cash tied up in their existing property
• Buying off the plan and not wanting to tie cash up for years

Deposit Guarantees are ideal for anyone who is asset rich but cash poor or for purchasers simply not wanting to use their own investments until settlement.

Any Australian permanent resident, registered company, trust or self-managed superannuation fund are eligible to apply.

A Deposit Power Deposit Guarantee can be issued for all or part of the deposit amount required, up to a maximum of 10% of the purchase price.

Deposit Power offers two types of guarantees, a Short Term Deposit Guarantee for settlements up to 6 months, and a Long Term Deposit Guarantee that can be used to secure properties with settlement terms of up to 48 months. Approval requirements for each of these guarantee types vary depending on the given scenario.

Deposit Guarantees can be issued for most situations and types of properties including first homebuyers, investors, simultaneous settlements, vacant land, off plan purchases, auctions and private treaty purchases.

This is used when referring to a title for established properties where the land has been registered with the Lands Title Office (or similar department, depending on the State) and have therefore been assigned a “Lot” and “DP”/”SP” number (DP = Deposited Plan, SP = Strata Plan). These details will be noted on the Contract of Sale in the Land section and in most cases will result in a specific settlement date being scheduled. Registered properties generally have a settlement date within 6 months from the contract date, making the Short Term Deposit Power Guarantee ideal when purchasing these types of property.

Unregistered, properties are incomplete land titles and are therefore not ready to be registered with the Lands Title Office (or similar department, depending on the State). This is common when purchasing off-the-plan apartments and in some cases vacant land and will be clearly noted as unregistered in the Contract of Sale in the Land section. In regards to off-the-plan, as the construction is ongoing, a specific settlement date is unable to be provided from the vendors and instead a “Sunset” or “Registration” date will be noted in the contract of sale. Unregistered properties usually require a Long Term Deposit Power Guarantee in order to fulfill the deposit clause in the contract of sale.

In some circumstances we may request that parties who are not listed as purchasers in the Deposit Power Deposit Guarantee application complete a Guarantee & Indemnity form. Completing the Guarantee & Indemnity form ensures that all parties including Guarantors are fully aware of their obligations.

Guarantor parties fall into the following categories;

• Co-owners
• Company Directors

When a Company (including a Company as Trustee for a Trust) is applying for a Deposit Power Deposit Guarantee, in addition to authorising the Company to purchase the Deposit Guarantee by completing the application form, Company Directors will also be required to complete the Guarantee & Indemnity form.

• Family Members

At Deposit Power we understand that many people get their start in the property market with help from their family. In situations where First Homebuyers would normally be ineligible for a Deposit Guarantee, we are usually happy to consider an application where an immediate family member will act as a Guarantor. To act as a Guarantor, family members need to own an existing property with sufficient equity to satisfy our      requirements. Family members acting as a guarantor are required to complete the Guarantee & Indemnity form.

Customers can apply directly to Deposit Power on this website or through an accredited Deposit Power mortgage broker, lender or finance specialist.

You can apply for a Deposit Guarantee when you have identified the property and negotiated the purchase price, or alternatively a few days before attending an auction.  We recommend that you have any required finance approved prior to signing any purchase contract and advise the seller’s representative that you intend to use a deposit guarantee in lieu of a cash deposit.

Should the purchaser default under the contract sale and be liable to forfeit the deposit, the seller may lodge a claim on the deposit guarantee for the deposit amount. Upon receipt of a valid claim, CBL as guarantor is required to make payment under the guarantee within two clear business days. Deposit Power will then seek to recover the deposit amount from the purchaser.

Yes. A Deposit Power Deposit Guarantee is ideal for auctions and is issued prior to you attending the auction. The maximum guarantee amount is shown on the guarantee certificate whilst the seller, property details and purchase price are left blank. This is done so you can attend and ‘bid at’ a number of auctions with the one guarantee. The seller and property details and purchase price are completed on the guarantee certificate when you are the successful bidder and the final purchase price has been determined.

The guarantee amount is limited to the maximum amount of guarantee shown on the certificate or 10% of the purchase price whichever is the lesser.

YES! We understand that depending on negotiations between purchaser and vendor deposit amounts can vary anywhere between 1% up to 10% of the purchase price.  We also know that at other times a purchaser may want to split their deposit between cash and a Deposit Guarantee. Deposit Power Deposit Guarantees are designed with this flexibility in mind.

The Deposit Power Guarantee is legally valid and available in all states and territories in Australia. The Deposit Power Deposit Guarantee is widely accepted as a cash deposit substitute. Deposit Power has been issuing Deposit Guarantees in Australia for over 25 years and is therefore very familiar and acceptable to estate agents, solicitors, conveyancers and sellers (vendors).

All Deposit Power Guarantees have an expiry date.  A Deposit Power Deposit Guarantee expires on the earliest of when:

• The Contract of Sale is complete; or
• The Guarantor pays the amount required to be paid under this Guarantee; or
• The Contract of Sale is terminated or rescinded and, in either case, the Vendor has accepted in writing the termination or rescission and the Purchaser is entitled to a refund of the deposit; or
• 5:00pm Sydney time on the earlier of the Date of expiry or, the Date of Expiry falls on a weekend or a public holiday in Sydney, the immediately preceding business day.

A Long Term Deposit Guarantee can be used to secure residential property sold off the plan, under construction or vacant land where an extended settlement period is required.

Using a deposit guarantee in lieu of a cash deposit when buying off the plan, will allow you to retain your cash in savings, investments or shares right up until settlement. Depending on your circumstances, this may save you thousands of dollars in interest.

As property developments can often experience delays beyond the vendors control, it is standard practice for a “Sunset” or “Registration” date to be inserted into the Contract of Sale in lieu of an actual settlement date. This date indicates when the property must be registered by (without which settlement cannot occur). The Sunset/Registration date is usually found in the Special Conditions of the Contract of Sale and dictates the term a Deposit Power Guarantee must be issued for. As with any Contract, each clause should be read in the context of the entire contract and we therefore recommend that you refer to your legal representative when trying to determine the Sunset/Registration date (some contracts may contain wording or additional clauses that effectively extend this date). These types of property purchases usually require a Long Term Deposit Power Guarantee.

Yes. The guarantee represents the deposit until settlement and does not remove the purchaser’s obligation to pay the full purchase price to the seller at settlement.

Deposit Power Deposit Guarantees are issued on the understanding that the purchaser remains responsible for the deposit amount guaranteed. Signing or acknowledging the Application and Counter Indemnity is the purchaser’s acknowledgement of their responsibility and liability in the event that they default under the terms of the Contract of sale.

In simple terms, should the purchaser default under the purchase contract and the seller makes a claim, Deposit Power on behalf of CBL Insurance will seek repayment of the claim amount from the purchaser.

Deposit Power charges a one off up-front fee to secure your Deposit Guarantee. There are no other fees or charges involved.

The fee for a Short Term Deposit Guarantee (up to 6 months) in most cases is calculated as a flat percentage of the guarantee amount and can be obtained by using our Fee Calculator.

Fees for Long Term Deposit Guarantees are based on the guarantee amount and term and can be obtained by using our Fee Calculator.

Refunds for Short Term Deposit Guarantees will only be provided where: the Guarantee has not been used (provided to the vendor/s) and the original Deposit Guarantee Certificate has been returned to Deposit Power within 30 days of the date of issue. A Short Term Deposit Guarantee administration fee of $220.00 will be deducted from any refund amount.

For Long Term Deposit Guarantees a refund will be considered where: the Guarantee has not been used (provided to the vendor/s) and the original Deposit Guarantee Certificate has been returned to Deposit Power within 30 days of the date of issue. A Long Term Deposit Guarantee administration fee of $700.00 will be deducted from any refund amount.

A rebate may be considered for Long Term Guarantees in the event the purchase property settles and the original Deposit Guarantee Certificate is returned to Deposit Power with at least 6 months remaining before the Guarantee expiry date. To apply for a rebate the Applicant must return the original Guarantee with a covering letter from the vendor’s solicitor confirming the date the property settled. In order to qualify for a fee rebate, both the original Guarantee and the solicitor’s letter must be received by Deposit Power at least 6 months prior to the expiry date of the Guarantee.

In the event that the purchaser defaults under the terms of the contract of sale, the seller may be entitled to make a claim on the Deposit Power Deposit Guarantee. To make a claim, the seller or their legal representative must provide certain information and documents. The term and conditions of the guarantee are contained on the reverse of the guarantee certificate and can also be obtained here.

Upon receipt of a valid claim, the guarantor, CBL Insurance Limited will make payment to the person nominated in the contract of sale to hold the deposit within two clear business days. The payment of the claim effectively puts all parties in the same position as if a cash deposit has been provided. CBL will then seek recovery of the claim amount paid by the purchaser.