Deposit on signing the compromis: what you need to know as a seller

The deposit on signing the compromis is the amount the buyer pays as soon as you both sign the sale agreement. It shows the buyer is serious, but it is not your money yet. In this article you will learn how large a deposit is usual, where the money sits until the deed, and what happens to it if the sale falls through after all. That way you know which terms you want to see in your compromis.

This article is about the deposit itself. If you want to know what happens when a buyer pulls out after signing, also read buyer pulls out after the compromis: what can you do as a seller?

What is the deposit and why ask for one?

In Belgium, a compromis is a full sale. Once buyer and seller agree on the property and the price, both parties are bound. The deposit is the part of the price the buyer already commits at that signing. On the day of the notarial deed it is deducted from the sale price, so the buyer only pays the balance at that point.

For you as a seller, the deposit serves two purposes. It is a sign of commitment: a buyer who transfers a substantial sum is less likely to back out than someone who only signed their name. And it is a buffer: if the buyer later defaults, there is already money set aside from which you may be able to recover compensation, although that does not happen automatically.

In sale agreements and in everyday speech, the words deposit and guarantee are often used interchangeably. Sometimes the contract first describes the amount as a guarantee, which is then counted as a deposit towards the price at the deed. In practice this makes little difference. What matters is exactly what your compromis says about who holds the amount and under which conditions it is released.

How much deposit is usual?

There is no legal percentage. In Belgian practice the deposit is usually five to ten percent of the sale price, with ten percent as the most common benchmark. That figure is no coincidence: the penalty clause in a compromis is often ten percent of the price as well. A deposit of the same size then in principle covers the damages the contract provides for if the buyer withdraws without a valid reason.

Still, you do not have to hold rigidly to ten percent. A buyer who already has to put a large part of their own funds into registration duties and notary fees sometimes has little cash to spare. A lower deposit can then make the difference between a signed compromis and a buyer who walks away. The reverse also applies: the lower the deposit, the less you have in hand if things go wrong.

A few rules of thumb help you weigh it up. With a buyer who has a strong file and an approved loan simulation, you can comfortably accept a lower percentage. With a buyer you know little about or who has not yet spoken to a bank, a higher deposit is reasonable protection. So the right answer depends less on the property than on the buyer. An agent who drafts sale agreements every day can tell you what is usual in your region and price range. By choosing to compare estate agents, you quickly see who is active in your area.

Where is the deposit held until the deed?

For many sellers this is the biggest surprise: the deposit usually does not land in your own account. It is paid into a third-party account, also called an escrow or client account, held by the notary or by the licensed estate agent handling the sale. It stays blocked there until the day of the deed.

This is not a formality but a protection for both parties. The buyer knows the money will not disappear if the sale unexpectedly falls through. You know the amount has actually been paid and cannot simply be clawed back. Notaries and estate agents licensed by the BIV/IPI are required to keep client money separate from their own funds. With an unlicensed agent you have no such certainty, which is one more reason to check your agent's licence.

So never let the deposit be paid directly to you, not even if the buyer suggests it because it seems simpler. Whoever receives the money personally may have to pay it back if there is a problem, and is then in a much weaker position. Cash payments are also not permitted for property sales in Belgium: the price, deposit included, goes through a bank transfer.

Also set out in the compromis the deadline by which the deposit must be paid, for example within a few working days of signing. A compromis that mentions a deposit but no payment deadline leaves the door open to delays.

What happens to the deposit if the sale does not go through?

Here everything depends on why the sale falls apart. Most sale agreements contain a condition precedent for financing: the purchase only becomes final if the buyer obtains a mortgage within an agreed period. If the bank refuses the loan and the buyer proves this on time and as the contract requires, the sale lapses. The buyer gets the full deposit back and you receive no compensation. You can read more about the deadlines around that condition in how much time between the compromis and the deed in Belgium.

If the buyer pulls out without a valid condition applying, they are in default. Even then you cannot simply keep the deposit. The notary or agent holding the amount only releases it with the written agreement of both parties or after a court ruling. In practice an amicable settlement often follows, with all or part of the deposit going to the seller as compensation. So do not count on having that money available for buying your next home.

If you as the seller no longer want to sell, the deposit cannot be used to buy your way out either. The buyer can then demand that the sale goes ahead or claim compensation. The compromis is just as binding on you as it is on the buyer.

What to check when drawing up the compromis

The terms on the deposit are set out in the compromis, and that is where they will be judged later if a dispute arises. So check these points before you sign:

• The amount or percentage of the deposit, and whether it is described as a guarantee or as a deposit towards the price.
• The account it is paid into: that of the notary or a licensed agent, never your own account.
• The deadline by which the buyer must pay, and what happens if they fail to do so.
• The wording of the condition precedent: which loan amount, within which period, and what proof the buyer must provide.
• The penalty clause for non-performance, so it is clear which amount is at stake.

If in doubt, have your notary review the compromis before you sign. A notary can also take care of drafting it entirely. Not sure yet which asking price is realistic? A free valuation of your home helps you start negotiating with a well-supported price. A realistic price attracts buyers who can secure their financing, and that makes the whole deposit question simpler.

In conclusion

The deposit on signing the compromis gives you security, but it is not money you can use straight away. It stays blocked in a third-party account until the deed, is then deducted from the price, and if there is a problem it is only released with an agreement or a judgment. Setting out the terms clearly in advance prevents most disputes.

An experienced agent drafts the compromis, screens the buyer and holds the deposit in a regulated third-party account. Want to know which agents in your municipality do this well? Compare up to three estate agents in your area, free and without obligation.