Real Estate: What Happens to Our Deposit if the Deal Doesn’t Close?
We Bought a House, BUT The Deal Didn’t Close. What Happens to out Deposit?
It is one of the questions I get asked most often.
What happens to the deposit if the deal does not close? Do we lose it?
The answer is not as easy as yes or no.
It is always disappointing after searching for a home, offering, acceptance and then it falls through.
One advantage (of many) when working with a registered real estate professional is they all have insurance from Real Estate Council of Ontario (RECO) that contains deposit coverage.
A deposit once given to the sellers brokerage must be placed in a trust account with a recognized financial institution within 5 days. There are strict rules regarding the handling of the deposit.
If a deal falls through after acceptance it is usually because a condition on the Agreement of Purchase and Sale is not met.
1. Financing Condition – unable to obtain financing for mortgage
2. Inspection Condition – Unexpected major issue with the property
So, how do you get your deposit back?
Best and easiest way is to have the sellers agree to release the buyer from the legally binding contract Agreement of Purchase and Sale by signing a mutual release. However, if the sellers do not agree to the release (usually in a slow market) then the option is court. There is no guarantee with this option. That is why it is always best to work with the sellers. Engaging both real estate professionals to negotiate this release. Lastly, the RECO insurance your REALTOR has includes coverages for fraud and misappropriation.
Read more on reco.ca Click Here
As always, if you are looking for more please do just ask.