Purchaser Payments

Modified on Mon, 16 Sep at 10:09 AM

Overview

Purchaser payments generally relate to the management of deposits on individual sales. Property Shell has two modes for managing purchaser payments.

Basic Deposit Management (Simple): the first is simple management of recording deposit information and generally used by property developers to record basic transaction details for deposits received. This is the default set up when first opening an account within Property Shell and is generally always the option used by property developers and sales groups who don't wish to manage advance trust accounting.
Trust Accounting (Advanced): Property Shell also supports trust account management and this is intended for sales agents and groups who have a trust account management function.

This guide walks through the basics of managing purchaser payments. For more extensive information around the management of trust accounting, please see the section on Trust Accounting.

How To Add An Individual Deposit/Payment

The starting point of adding deposits and purchase the payments is generally done on the property page under the Payments tab. You can only add deposits and purchase a payments once there is a sale attached to an existing property.

Navigate to a property with a sale
Click the third tab Payments
Click the + button under the Purchaser Payments section
Fill in the required information
Click Save

Deposit Types

Property Shell supports a series of different types of Purchaser Payments. This can relate to inbound payments where money is received from the purchaser such as a Trust Deposit, Reservation Deposit or can also relate to other deposits like Deposit Bonds or Bank Guarantees.

The deposit types and explanations are listed below.

Trust Deposit	Money received and generally held in a trust account.
Reservation Deposit	Sometimes hold or reservation deposits are taken on a project and not taken into a trust account. This is a way to record deposits which are taken as hold or reservation deposits.
Deposit Bond	A deposit bond is a financial instrument used in real estate transactions, typically in Australia, as a substitute for a cash deposit when purchasing a property. It acts as a guarantee to the seller that the buyer will pay the deposit amount at settlement. Instead of paying the deposit upfront in cash, the buyer obtains a deposit bond from a provider, which promises the seller that the deposit will be paid if the buyer defaults.
Bank Guarantee	A bank guarantee, in the context of paying a deposit on a property, is a financial instrument issued by a bank on behalf of a buyer, ensuring that the seller will receive the deposit amount in case the buyer defaults on their obligation. It serves as a substitute for an upfront cash deposit during a property transaction. Here’s how it works: Issuance: The buyer requests a bank guarantee from their bank, which involves the bank assessing the buyer's financial situation to determine their ability to cover the deposit. The bank may require the buyer to provide security, such as cash or other assets, to issue the guarantee. Guarantee: The bank then issues the guarantee to the seller, promising that it will pay the deposit amount if the buyer fails to meet their contractual obligations, such as completing the property purchase. No Immediate Cash Outlay: Similar to a deposit bond, a bank guarantee allows the buyer to avoid paying the deposit in cash upfront, which can help with cash flow management. Seller's Security: The seller receives a guarantee that the deposit will be paid if the sale doesn't go through due to the buyer's fault, providing financial protection to the seller. At settlement, the buyer must still pay the full purchase price of the property, including the deposit amount guaranteed by the bank. If the buyer defaults, the bank pays the deposit to the seller, and the buyer must reimburse the bank.
Progress Payment	A progress payment is intended for any payments made after an initial deposit and before the completion or settlement of a property. This may be more related to house and land style projects when progress payments may be more common.
Refund	A refund is when money is paid from the vendor or the person holding deposit back to the original purchaser. This is usually when they purchase the cancels an original reservation.
Purchaser Settlement Payment	A purchase a settlement payment is when money is made towards the contribution of the settlement of a property typically around the time of settlement
Settlement Payment To Vendor	A settlement payment to vendor relates to when money comes from a vendor's solicitors trust account into the vendors bank account.
Payment To Vendor's Solicitor	A payment to vendor's solicitor Is usually done after the receipt of a deposit into an agents trust account and where the movement of money then goes into the vendors solicitor's account. This allows an agency to track money going out of their account and into the vendor's solicitor's account.
Settlement Payment To Commission	Sales commission due to sales agents may often be paid out of the original deposit monies held in trust. For example if an original $10,000 is held within an agents trust account and $2000 of this is commission due to the agent as commission, then we may see a $2000 transaction paid to commission and an $8,000 transaction paid to the vendor.
Settlement Adjustments	Reserve for any ad hoc entries around settlement
Other	Other is a catch all category for any payments not outlined in those above.

Full Deposit Amounts

The full deposit amount is the full deposit amount that needs to be paid under the property and this figure is saved under the Property tab on the property page.

If you can see that the deposit is overpaid or underpaid, you need to update the full deposit amount on the property page so that it is set as required.

Automatically Calculation Of Deposit Amounts

Full deposit amounts can also be automatically calculated on project level. This means in some contracts where you may be adding in upgrades extras and variations and where these changes modify the total purchase price you may want to automatically set the deposits to a certain percentage of the total purchase price. To modify this:

Navigate to a Project
Click the Cog Icon (Settings)
Navigate to the "Full Deposit" section
Update the settings as you need

The full deposit amount is generally a percentage of the total purchase price. Set a percentage between 0 and 100 to automatically update full deposit amounts based on total contract price for all properties. Leave blank to manually manage deposits if you have any properties with different full deposit amounts. Setting a value here will not bulk update property full deposit amounts, but will only be calculated from the amount set here when the price of a sale changes.

You can also update other deposit settings within this section such as when the full deposit due date is meant to be calculated, whether it should trigger and unconditional contract update and whether or not to allow unconditional contracts without a full deposit.