What is a Deposit Bond?

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A Deposit Bond is a guarantee or bond that substitutes for a cash deposit between signing contracts and settlement. The Guarantee can be used for all or part of the deposit required up to a maximum of 10% of the purchase price. It is a guarantee to the seller/vendor from the insurer.

At settlement you, the buyer/purchaser, are required to pay the full purchase price including the deposit. The use of a Guarantee does not remove your obligation to pay the full deposit upon settlement, If you default under the Contract of Sale for the purchase but are still required to pay the deposit, the seller can claim the Guarantee amount from the insurer. The insurer will then recover the money from you.

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