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What is a deposit bond?

Deposit bonds

What is a deposit bond? A deposit bond is arranged by the property purchaser with an insurance company to provide a guarantee to the vendor that they will receive their 10% deposit even if the purchaser defaults on the contract of sale. A small premium is paid to the insurance company.

All purchase funds are paid at settlement of the property. In the ordinary course of events, settlement takes place, the purchase price is paid in full and the deposit bond simply lapses.

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