A contract can become an instalment contract for many reasons including:
a) the deposit is more than 10%; or
b) the deposit is stated to be non-refundable in all circumstances; or
c) the buyer is given a rebate off the purchase price which makes the deposit more than 10% of the rebated purchase price; or
d) the Buyer is required to pay money to the Seller (in addition to the deposit if the deposit is equivalent to 10% of the purchase price) before receiving a transfer and the amount payable under the contract exceeds market value for what is provided in exchange. For example, a rent to buy contract may require the payment of instalments which exceed the market rent that would otherwise be payable.
The effect of the contract being an instalment contract is:
Therefore, we suggest the Buyer always instruct his/her solicitor to investigate the possibility that the Buyer’s contract is an instalment contract.