What you need to know about making a deposit on a property that you are about to purchase.

When purchasing a property there is usually a deposit required as a security for the performance of the purchasing party’s obligations. The amount paid as a deposit is later credited towards the purchase price as a partial payment at closing. Naturally the sellers usually prefer to receive the highest amount of deposit possible to discourage the buyer from backing out of the deal.

Conversely the buyers desire to pay the minimum amount possible as a deposit to minimize their loss. However, the damages in case of a default are not limited to the amount of deposit. The sum paid as a deposit is there to compensate the seller in case of a default because seeking damages through other channels could be costly and difficult. Contact a real estate lawyer in Mississauga if you are in a dispute over a deposit.
Ontario Real Estate Association provides three alternatives regarding the payments of deposits:

1. The deposit could be paid at the time the offer is made.
2. It may be presented upon acceptance.
3. Paid “as otherwise described in the agreement”.

Real Estate and Business Brokers Act requires the brokers to move the deposit money into their trust accounts within five days of receiving it. In case if the property is sold without a broker, the deposit money is placed into the seller’s lawyers trust account. In both cases the money is kept in trust for the buyer and the seller by a third party. This protects the buyer in case if the seller is selling fraudulently or tries to back out of the deal unjustifiably without returning the deposit. If you need a lawyer to assist you with the receipt of a deposit sum, please contact a real estate lawyer in Mississauga.