The first payment a buyer makes to commit to a property purchase, usually 10 percent of the purchase price, paid on the contract going unconditional.
A deposit is the first payment a buyer makes when committing to a property purchase in New Zealand. It is held by the seller’s real estate agent or the seller’s lawyer in a trust account, then paid out at settlement or earlier if the agreement allows. The deposit is not a separate fee. It is part of the total purchase price.
Plain-English example
You sign a sale and purchase agreement on a house at 12 Smith Street for NZD 900,000. The agreement says the deposit is 10 percent, payable on the agreement going unconditional. Two weeks later your finance is approved, your LIM is clean, and you waive your conditions. At that moment you owe NZD 90,000 in deposit funds, paid into the agent’s trust account. The remaining NZD 810,000 is paid on settlement day, six weeks after that.
Why it matters
The deposit is the buyer’s first real money on the line. It signals you are serious. If you default on the agreement after going unconditional, the seller can keep the deposit. That can be a five-figure or six-figure consequence for getting cold feet at the wrong moment.
The deposit also has cashflow implications you have to plan for. It is paid weeks before settlement, often on the day conditions are waived, and it is paid in cleared funds. Banks generally do not lend specifically against the deposit. Most buyers either save the deposit themselves, draw on KiwiSaver, or use a deposit bond.
Who needs to care
Every buyer signing a NZ sale and purchase agreement needs to know exactly when their deposit is due, how much it is, and where the funds are coming from. Buyers using KiwiSaver need to time the withdrawal carefully because Inland Revenue and the KiwiSaver provider take time to release the funds. Buyers using a deposit bond need bank approval ahead of time.
Sellers need to watch deposit terms too. A small deposit (say 5 percent) gives a buyer less skin in the game. A staged deposit (say 5 percent now, 5 percent on conditions) is sometimes a useful compromise.
What NZ Legal does for it
We advise on deposit timing in every contract review. We make sure the deposit clause matches your funding plan, especially if you are using KiwiSaver, a deposit bond, or staged payment. We hold the deposit in our trust account where required, and we manage the release on the buyer’s instructions. If a deposit dispute arises after the agreement is cancelled, we run the file through to resolution.
If you want a clean front-end on the deposit, send us the draft sale and purchase agreement and your funding plan and we will reply with a fixed-fee estimate.
Related glossary terms
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Sale and Purchase Agreement
The contract between a buyer and seller for a NZ property. Almost always uses the ADLS or REINZ standard form, customised with conditions and special clauses.
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Conditional Offer
A binding sale and purchase agreement that contains conditions the buyer must satisfy or waive before the deal is final, for example finance approval, LIM, or a building inspection.
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Settlement
The day a property purchase legally completes. The buyer's lawyer pays the balance of the purchase price, the seller's lawyer hands over the keys, and ownership transfers in Landonline.
