Open a sessionReceipt of the deposit cheque: correctly reflecting reality
Notice to reader
Please note that the following article has not yet been updated since the coming into force of the new Real Estate Brokerage Act on May 1, 2010. The OACIQ positions which are conveyed in this article may have evolved since the date of its publication. It is your responsibility to ensure, at all times, that you are acting or that you are exercising your rights or recourse in accordance with the Real Estate Brokerage Act, its regulations or any other applicable law.
If you have any questions, please contact the Info OACIQ Information Centre at 450 462-9800 or 1 800 440-7170, or by sending us a message.
PRACTICES SERIES
Source : ACAIQ
The deposit according to clause 4.2 of the promise to purchase
Clause 4.2 of the mandatory promise to purchase for residential properties requires the deposit cheque to accompany the promise to purchase. This sum is deposited in the trust account of the broker acting as trustee upon acceptance of the promise. This mechanism ensures the protection of the parties to the transaction; the seller knows that the deposit has been paid and the buyer knows that his money is secure. The real estate agent must request this cheque from the buyer at the signing of the promise to purchase.
If the buyer insists on paying the deposit later
It seems however that the procedure outlined in clause 4.2 of the promise to purchase is not always followed. Several agents receive the buyers’ deposit cheque only after the conditions of the promise to purchase have been fulfilled. In most of these cases, we observe that the promise to purchase signed between the buyer and the seller does not indicate that the deposit will be paid later. Consequently, the promise to purchase leads the sellers to believe that the agent has the deposit in hand when the promise to purchase is presented and that this amount will be deposited in the broker’s trust account upon acceptance of the promise, which is not the case at all.
What is the proper procedure?
When a buyer wishes to delay the payment of the deposit and makes a request to this effect, the promise to purchase must reflect this, as follows:
- Do not cross out anything under clause 4.2 of the promise to purchase.
- Although there are no blank lines there, add and have the buyer initial this phrase: ''see clause 8.1 – Other Declarations and Conditions'' in the space between the two paragraphs of clause 4.2 of the promise to purchase.
- Under clause 8.1 of the promise to purchase, insert and have the buyer initial the following clause: ''Contrary to what is indicated in clause 4.2, the buyer will remit the cheque in trust after all the conditions have been fulfilled, except for the signing of the act of sale before the notary. All other terms of clause 4.2 remain unchanged.''
- Finally, explain to the seller and to the buyer the nature of the change under clause 4.2 by telling them that the deposit will be paid later in the selling process, i.e. only once the conditions have been fulfilled. The seller can always demand that the cheque be paid earlier in a counter-proposal. This will then become part of the negotiation.
Reminder:
- Advise the buyer to remit the deposit cheque at the signing of the promise to purchase.
- Only if the buyer wants to hold off paying the deposit should you use this procedure, making sure to follow steps 1 through 4.
- You should not be using the procedure systematically with all your transactions.
------------------ For more information on the payment of the deposit, see the following documents:
Giving a deposit with the promise to purchase can make all the difference
