Deposit Amount and Trust Account Rules in Queensland Property Sales
A buyer signs your contract, shakes your hand, and says the deposit will hit the account tomorrow. What happens if it doesn’t? What’s the correct amount in the first place? And once those funds land, who controls them — and under what authority? These questions sit at the centre of almost every Queensland residential sale, yet the rules governing the deposit amount and trust account handling are frequently misunderstood, even by experienced practitioners.
The deposit in a Queensland property sale is not simply a good-faith gesture. It holds the buyer’s place until settlement or lawful contract end, and the way deposits are agreed upon, paid, and safeguarded is shaped by specific legal rules that can directly affect whether a purchase proceeds smoothly. Getting this wrong has direct consequences — for the transaction, for your licence, and in the most serious cases, for individual liberty.
What the REIQ Contract Says About Deposit Amount
The REIQ/QLS property contracts are the most common form of sale contracts used in Queensland, with terms settled by the REIQ and QLS and updated with changes in law and technology. The current edition in residential use is the Nineteenth Edition for Houses and Residential Land, released on 7 June 2024 alongside the major reform of Queensland’s residential tenancy laws.
The contract contains a reference schedule in which the deposit amount, the deposit holder, the trust account BSB and account number are all required entries. The reference schedule records the deposit holder’s trust account bank details — the BSB and account number — directly in the contract itself. Leaving any of these fields blank, or failing to confirm the correct account details before the buyer transfers funds, is a practical and professional failure that creates immediate risk.
On the question of how much deposit is appropriate, the contract does not fix a number — that is a commercial negotiation between the parties. What the law does fix is a ceiling. Under Queensland law, a deposit is legally defined as an amount not exceeding a prescribed percentage of the purchase price: 10% for existing property and 20% for off-the-plan contracts. Any payment above these thresholds changes the legal nature of the agreement, classifying it as an instalment contract.
This distinction matters enormously. An instalment contract gives the buyer additional statutory protections but reduces the seller’s ability to immediately access or retain funds if the buyer defaults. The seller must provide a formal default notice, usually allowing 30 days to remedy the breach, before they can terminate. This extended process can delay a resale and add costs for the seller, which is why most sellers avoid accepting deposits above the 10% limit for existing property.
In practice, residential deposits in Queensland generally range from 5 to 10% of the purchase price, with higher amounts common in competitive sales while private negotiations can allow for more flexible terms. Auctions typically require around 10%, signalling strong buyer commitment and reducing the seller’s perceived risk. Deposits below 5% are not prohibited in private treaty sales, but sellers should understand they carry less security.
Deposit Structures: Initial and Balance Deposits
The REIQ standard contract often splits the deposit into an initial payment on signing and a balance due later, usually after conditions such as finance or inspections are met. This split-deposit structure has become common in Queensland residential sales, particularly where buyers need time to liquidate existing savings or where conditional periods are lengthy.
In private sales, buyers usually pay a small initial deposit of a few thousand dollars, then pay the remaining amount within 7 to 14 days or after the contract becomes unconditional. Both payments must be directed to the nominated deposit holder’s trust account. The agent’s responsibility on receipt applies to each instalment separately — each tranche received triggers the obligation to bank it promptly.
The deposit date means the date stated in the contract by which the buyer must pay the deposit to the nominated deposit holder. It is separate from the contract date, separate from dates for finance, building and pest, and separate from settlement. These distinctions catch buyers and occasionally agents by surprise. Confusing the deposit date with the finance approval date is a mistake that can cost a buyer their deposit entirely.
Electronic Transfer and the Timing Problem
The shift to electronic deposits creates a specific timing hazard that agents must understand and communicate clearly to buyers. When paying by electronic transfer, older contract wording and court decisions have treated “pay” as requiring actual receipt by the deposit holder by the deadline time, not merely initiating a bank transfer earlier that day.
Buyers now have three business days for deposit funds transferred electronically to clear into the deposit holder’s trust account, as long as they provide evidence in accordance with the contract. This provision in the current REIQ editions eases the timing pressure somewhat, but it is not a blanket grace period. The buyer must comply with the contract’s specific evidence requirements — typically, providing proof of the electronic transfer.
Recent updates to the REIQ contract mean that a deposit due date can be enforceable even if it falls on a weekend or public holiday. Other contractual due dates may still roll to the next business day, but deposits are treated differently — so “Monday is fine” can be a costly misunderstanding. The practical fix for agents negotiating contract terms is to specify the deposit due date as a number of business days after the contract date rather than a calendar date, ensuring it falls when banking facilities are actually available.
A related risk concerns cybercrime. Cyber criminals are targeting real estate transactions by sending fraudulent electronic communications impersonating lawyers and real estate agents. Before paying any funds, the buyer should contact the intended recipient by telephone to verify and confirm account details. This warning now appears on the face of the REIQ contract itself — agents are expected to echo it when handing over or explaining contract terms.
The Legislative Framework: Agents Financial Administration Act 2014
The handling of deposit money received by an agent is not governed solely by the contract — it is governed primarily by statute. The Agents Financial Administration Act 2014 (Qld) (the AFAA) is the governing legislation, and its obligations are strict, with serious penalties for breach.
The core obligation is contained in section 16 of the AFAA. An agent must, before the end of the first business day after receiving the amount, pay it to the agent’s general trust account. The maximum penalty for breach of this obligation is 200 penalty units or 2 years’ imprisonment. There is no discretion here, no scope for delay, and no exception for an agent who is busy, interstate, or waiting for paperwork to be finalised. The obligation triggers on receipt of the money, full stop.
The AFAA also addresses what can and cannot flow into a trust account. An agent must not pay to a trust account an amount other than an amount that must be paid to the account under section 16 or 17, with a maximum penalty of 200 penalty units or one year’s imprisonment. The trust account is not a general operating account. Money that does not belong there — including the agent’s own commission before it is properly earned and drawn — has no place in it.
Under section 17 of the AFAA, a property agent may invest trust money rather than hold it in the general trust account, but only if the direction to invest is given by both parties to the sale, and the amount must be paid to a special trust account with a branch of a financial institution operated for the investment of that amount. This is a limited exception requiring explicit joint direction — it is not something an agent can initiate unilaterally on the basis that it benefits the parties.
The critical prohibition on payments out of the trust account is section 21 of the AFAA. Section 21 of the Act provides that amounts paid to the trust account of an agent may only be paid out in a way permitted by the Act. This is the provision that catches agents who, for whatever reason — including genuine confusion about entitlement — pay deposit monies out before the conditions for disbursement are satisfied. The consequences are severe. Section 82 of the Act provides that a person may claim against the Claim Fund if the person suffers financial loss because of a contravention of section 21.
Who Holds the Deposit: Stakeholder Capacity and the Agent’s Role
An agent holding a deposit does so in a specific legal capacity. The deposit holder is commonly a property agent or a law practice, holding the deposit in a trust account as stakeholder, subject to the contract and Queensland trust account rules.
Acting as stakeholder is distinct from acting as agent for either party. A stakeholder holds funds on behalf of both parties simultaneously until the conditions for release are satisfied. The agent is not free to act on the seller’s instructions alone to release the deposit, nor on the buyer’s instructions alone to refund it. Both parties’ rights must be considered, and the release must be properly authorised.
The deposit monies form part of the purchase price and are paid as an assurance for the buyer’s performance of her obligations under the contract. The contract documents do not contemplate any loan to a third party, and the agent is bound to hold and apply the deposit monies in accordance with the terms and conditions of the contract documents rather than any side agreements. This point was made clearly by the Queensland Civil and Administrative Tribunal (QCAT) in the matter involving Ralan Property Services — a case that illustrates precisely what can go wrong when deposit money is misdirected, regardless of whether the original intention was legitimate.
The Deposit Holder Named in the Contract
The contract’s reference schedule names a specific deposit holder. The REIQ Contract for Houses and Residential Land has been approved by both the Real Estate Institute of Queensland and the Queensland Law Society as being suitable for the sale and purchase of houses and residential land in Queensland. The deposit holder can be the agent acting on the sale, or — in some transactions — the seller’s solicitor. Where a solicitor is named, the buyer pays directly to the solicitor’s trust account, and the agent plays no trust account role. Agents should understand this distinction clearly, as they sometimes assume they will always receive and hold the deposit.
Where the agent is the deposit holder, the trust account nominated in the contract must be the agency’s actual general trust account. An agent cannot nominate an account that is not a licensed trust account, nor can they direct funds to a personal account or an account belonging to a related entity.
Releasing the Deposit: Permitted and Prohibited Payments
The moment a contract falls over — whether through a failed finance condition, a buyer exercising cooling-off rights, or a party’s default — is precisely when deposit handling goes wrong. The rules governing release are not simple, and agents who act on assumptions rather than authority face serious exposure.
On settlement, the deposit is applied toward the purchase price. The agent is authorised to pay their commission from the deposit (to the extent it equals or is less than the deposit held) upon settlement completing, and to remit the balance to the seller. This is the clean scenario.
Where a contract is terminated and the parties agree who is entitled to the deposit, the agent can pay it out according to the joint written direction of both parties. This is the safest and most straightforward path to release.
The difficulty arises when the parties dispute entitlement. The AFAA’s Division 5 (sections 25–28) deals specifically with disputed deposits. Section 26 of the AFAA sets out a statutory mechanism by which an agent may, after giving proper notice and waiting a specified period without any proceedings being commenced, pay the disputed amount to the party the agent believes is entitled. An agent can advise the parties that it will pay the amount in dispute to the seller after a specified date — usually around 60 days after notice — unless a proceeding disputing the seller’s entitlement is commenced or the parties jointly authorise payment before that date.
The case of Prestige & Rich Pty Ltd, litigated through QCAT and ultimately to the Queensland Court of Appeal, is a sobering illustration of what section 21 exposure actually looks like. Jianjie Li contracted to purchase a residential property from Hetalbin and Milin Patel, with the agent accepting a deposit of $24,500 into its trust account. When the buyer terminated under a finance condition, the Court of Appeal held that because the contract had fallen through, the agent was not entitled to commission. The agent had paid the deposit into its general account, retained commission of $20,000 for the failed sale and remitted only $4,500 to the sellers. The buyer submitted a claim to the Claim Fund, and a decision was made that the buyer was entitled to the full deposit and that the agent and its director were liable for the buyer’s financial loss.
The lesson from this case is unambiguous: an agent has no right to extract commission from a trust account on a transaction that did not complete, and the trust account cannot be used to satisfy debts the agent believes it is owed. Trust money belongs to the parties, not the agent’s business.
The Cooling-Off Period and Deposit Implications
The REIQ contract may be subject to a five-business-day statutory cooling-off period, with a termination penalty of 0.25% of the purchase price applying if the buyer terminates during this period. Where a buyer has paid a deposit prior to exercising their cooling-off right, the mechanics of repayment are specific.
If the buyer terminates during cooling-off, the seller may keep a termination penalty calculated as a percentage of the purchase price, and the balance of the deposit is generally refunded within the timeframe set by the legislation. The agent holding the deposit must ensure that the 0.25% penalty — and only that amount — is retained for the seller, and that the balance is returned to the buyer. Calculating this correctly is the agent’s responsibility.
Auctions are a distinct scenario. A buyer at auction has no cooling-off rights, and the full deposit — typically 10% — is payable immediately on the fall of the hammer. The agent is obligated to bank this amount by the end of the following business day, as with any other deposit received.
Trust Account Records, Audits, and Obligations for Principals
Every principal licensee operating a trust account must maintain proper records and submit to regular audit. The agent must appoint an auditor and notify the chief executive. The audit requirement is not administrative box-ticking — it is the primary external check on the integrity of trust funds held by agencies across Queensland.
The record-keeping obligations are detailed and non-negotiable. Each trust account transaction must be recorded in a cash book, posted to a ledger, reconciled monthly, and maintained in a form that can be inspected by authorised officers. Under the Agents Financial Administration Regulation 2014, separate ledger accounts must be kept for each transaction, identifying the property, parties, and amounts received and disbursed.
An agent must not open a general trust account or special trust account at a place other than the office or branch of an approved financial institution within the State. This means overseas banks, online-only neobanks without an Australian financial institution licence, and interstate-only financial institutions are not permissible repositories for Queensland property trust accounts. Principals who have questions about whether a particular institution qualifies as an approved financial institution should check directly with the Office of Fair Trading.
One often-overlooked obligation: trust money cannot be used to satisfy the agency’s own debts or the debts of its creditors. Trust money is explicitly not available to the agent’s creditors. This protection is fundamental — it means a buyer or seller whose funds are held in trust retains a priority claim over those funds even if the agency becomes insolvent.
Off-the-Plan Contracts and Deposit Considerations
The deposit rules for off-the-plan purchases have their own flavour. As noted above, off-the-plan contracts may require up to 10% deposit, with legislation permitting a maximum of 20% before additional rules apply. These are often paid in stages to ease the buyer’s cash flow.
The Ralan Property case — decided by QCAT — involved off-the-plan purchases and illustrated the danger of deposit monies being redirected by a developer or agent into other investment vehicles. The applicant paid $179,500 in deposit monies for two off-the-plan apartments. Ralan Property paid the deposit monies into its general trust account but subsequently transferred $179,300 to Ralan Investments pursuant to side agreements signed by the applicant, which purported to loan the deposit monies to Ralan Investments to be invested in two separate development projects.
The Tribunal’s analysis was precise. Pursuant to section 16 of the AFAA, an agent must, before the end of the first business day after receiving the amount, pay it into the agent’s general trust account or, if section 17(1) applies, invest it under section 17(2) of the AFAA. The side agreements did not constitute proper investment directions under section 17, and the redirection of funds was found to be a misapplication. For agents handling off-the-plan transactions, this case is required reading: the trust account obligation does not evaporate because a developer tells you to treat the deposit differently.
What This Means for Queensland Agents
The deposit amount and trust account rules in a Queensland property sale operate at the intersection of contract law and statute. Agents cannot treat these as the solicitor’s problem to resolve after the fact — the legislative obligations fall on the agent at the moment of receipt and continue throughout the transaction.
On deposit amounts: negotiate the amount with the parties’ interests in mind, confirm it does not push the contract into instalment contract territory (above 10% for existing property), and structure any split deposit so that both tranches have clear due dates expressed as business days rather than calendar dates.
On receipt: bank every deposit to the correct trust account on the same business day or, at the very latest, before the end of the following business day. Do not wait for the contract to become unconditional, for the seller to call you, or for any other trigger. Section 16 of the AFAA starts counting from receipt.
On cybercrime: verbally confirm trust account details with the buyer and their conveyancer before any electronic transfer takes place. The REIQ contract now carries this warning on its face — agents who fail to repeat it in their own communications will find it difficult to explain why they did not.
On release: never pay out of trust without proper authority. If the parties agree, get joint written directions. If the contract settles, apply the deposit to the purchase price and draw commission accordingly. If there is a dispute, follow the AFAA’s dispute provisions — do not unilaterally pay one party and assume the other will not pursue it. The Prestige & Rich case demonstrates that QCAT and the Court of Appeal will hold agents personally liable for unauthorised drawings.
On record-keeping: principals must maintain auditable trust account records. A trust account that is not properly maintained is not merely a regulatory inconvenience — it is an open invitation to an adverse audit finding and, depending on the nature of the irregularities, a potential criminal matter.
These obligations are not burdensome for agencies operating clean, well-governed trust accounts. For those who cut corners, or who allow familiarity with the process to breed complacency, the consequences — licence suspension, personal liability, prosecution — are very real.