29 October 2010
But if they don’t, then the deposit must remain in the brokerage trust account till the court order is obtained.
Sometimes the buyers can tell the seller that they aren’t satisfied with the results of home inspection. But even then, the brokerage cannot give the deposit back at once – a mutual release should be signed. You may ask why? The deal is that the seller might have an issue with how the home inspection was conducted. In the end, he or she can refuse to release the deposit. That’s why it’s very important to use a professional inspection company before trying to cancel a deal.
Let’s suppose you submit a deposit cheque when the offer is made. According to Ontario laws, this cheque must go into a trust account during 5 business days, even if the offer is not accepted yet. In case the deal is finally not accepted, you still need a mutual release to have your money back. And this procedure can cause you some problems, if you need to return the money as soon as possible, because you want to make an offer on another property.
This is why most offers in Ontario have a clause that the deposit will be paid within 24 hours of acceptance. It means you have to pay the deposit only after the offer has been accepted.
Another question that bothers many consumers is what happens if the listing brokerage goes bankrupt? Is there a possibility that there will be no money in the trust account? You shouldn’t worry about that – all consumer deposits are protected by an insurance fund. And it also concerns lawyers’ trust accounts.
Another thing to remember: if a seller is selling a home by himself, do not make the deposit payable to the seller directly. You may have problems if the seller takes the money and runs or declares bankruptcy – your money won’t be protected. In this case, you have two variants: either have the buyer brokerage hold the money in trust or make it payable to the seller’s lawyer.
This information can help both buyers and sellers understand all the necessary details of real estate deal closing in order to be prepared for everything.