The standard Purchase and Sale Agreement in Ontario gives the buyer two options when it comes to real estate deposits: 1. pay the deposit at the time of making the offer – “herewith” or 2. within 24 hours of the having the offer accepted – “upon acceptance”. Most buyers prefer the latter as there is no point in going to the trouble of arranging the deposit if your offer isn’t accepted. If you are in a bidding war, including the deposit with the offer is a sign of good faith and a symbol of financial means that might make your offer more competitive.
No. Once the deal is accepted the buyer is legally obligated to provide the deposit. If the deposit is not paid, the seller can relist the property and sue for the difference in selling price along with legal fees.
What if the deposit is late?
If the deposit is not received within 24 hours, the seller has the right to cancel the deal. This is a factor that may come into play when the seller has another buyer standing by who is willing to pay more and the seller may take advantage of this breach in the timeline to cancel the contract and enter into an agreement with the other buyer.
How much should a buyer pay as a deposit?
Why does the deposit go to the seller’s real estate agent and not the seller?
The real estate brokerage holds the deposit in trust and it is protected by insurance so in the event a brokerage or seller goes bankrupt, the buyer can get their money back.
Is the deposit returned if conditions aren’t met?
A deposit can only be released by mutual agreement between the buyer and the seller. If the seller feels that the buyer did not act in “good faith” in trying to satisfy the conditions they can refuse to release the deposit. If this is the case, it would only be released by order of a judge after the matter is taken to court. This is why it is important to ensure that you enter into a purchase and sale agreement with good intent. Conditions should not be used as a means of escaping a contract. In a market like Toronto, a way to minimize the risk of losing a large deposit is by making an initial smaller deposit and then a larger deposit once the conditions are fulfilled.