As an agent, you are holding the deposit as stakeholder for both the Vendor and Purchaser.
A stakeholder is a person or entity having in their possession (holding) money or property in which they have no interest, right or title, awaiting the outcome of a dispute between two or more claimants to the money or property.
The stakeholder has a duty to deliver, to the owner or owners, the money or assets once the right to legal possession is established by judgment or agreement.
In South Australia, in the event of termination of a contract (other than one where the termination is mutually agreed), the following steps should be taken by a real estate agent as stakeholder before releasing the deposit to any party:
- Obtain a copy of the relevant termination notices to confirm if served appropriately (if unsure, seek legal advice) and determine who is the benefiting party of the deposit (vendor or purchaser).
- Email or write to the party NOT receiving the deposit advising the contract has been terminated and you will be releasing the deposit to the other party if you do not receive a response within 7 clear business days.
In an example where the vendor has terminated the contract due to the default of the purchaser the written notice described above (Release Notice) should state that the vendor is entitled to the deposit which will be paid out to the vendor, unless a legal action is commenced by the purchaser and served on both the vendor and stakeholder/agent within that period. If the purchaser does not issue a proceeding and serve it on the stakeholder/agent then the stakeholder/agent will release the deposit under the contract to the vendor immediately on the expiry of the Release Notice period.
Subject to the above provision, and in the event that a legal proceeding is instigated between the purchaser and the vendor in relation to the contract and the deposit, then the stakeholder/agent (subject to the deposit not having already been released as above) can pay the monies into court to hold pending a resolution.
If you do find yourself unsure of this process, we are available to help you through any issues or can also refer you to the team at Eckermann Lawyers if the circumstances require legal advice.