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Return Of Deposits - Can you get your money back? |
At the end of every failed contract the question whether a defaulting purchaser is entitled to the return of their deposit will be raised. The conduct of the parties, circumstances which brought about the termination and forfeiture, and the amount at stake will all help determine if a purchaser who doesn't proceed can retrieve their deposit. |
The deposit represents not only part of the purchase price but also, and more importantly, a pledge to bind the bargain. |
The question of deposits was recently discussed in a NSW appeal case in which the purchaser argued that the vendor had misrepresented the size of certain apartments in a block of flats. The purchaser sought to rescind the contract. |
The judge had ordered an inquiry into the damages suffered by the vendor, but also ordered the return of the purchaser's deposit. From that decision, an appeal and cross-appeal followed. |
The question of damages and the return of the deposit are interrelated, since a vendor who seeks damages must give credit for a forfeited deposit. However, there is no rule which requires a vendor's claim for damages to be determined before an application for the return of a deposit. In this instance the court upheld the purchaser's contention that the vendor had engaged in misleading and deceptive conduct, and ordered the return of the deposit. |
In other recent cases, purchasers have not been so successful. These cases make it clear that the opportunities for recovering a deposit are narrow. They emphasise the deposit's contractual importance, both as a part-payment and a pledge to seal the bargain. |
