If you are buying a house, you will find various deposits have to be paid, and the following will help to explain them:
When Do I Have To Pay the Deposit?
As a home buyer in Canada, you can pay the deposit within 24 hours of the offer being accepted by the seller, as long as the seller is open to this. Most buyers prefer this arrangement. The other option when it comes to real estate deposits is to pay the deposit at the same time the offer is made, and the buyer may insist on this, especially if there is a bidding war for the property.
Can Buyers Refuse to Pay Deposits, to Get Out Of a Deal?
It’s important to understand that you can’t change your mind once the deal has been accepted. The seller can potentially sue you for the difference in price, along with any legal fees, if you back out of the deal and the seller ends up selling the property for less.
What If Deposits Are late?
In any real estate contract, the deadlines are important and must be adhered to, and the seller can cancel the deal if you are late with your deposit. Explain clearly in your offer that you will need more time to come up with the deposit, as you don’t want the seller to cancel the deal and then turn around and sell it to someone else at a higher price, which sometimes happens.
How Much Deposit Amount Is Required?
The typical deposit amount can be as low as several hundred dollars in some parts of Canada, although in Brampton that amount is around 2 percent, and in Toronto, you can expect to come up with about 5 percent as a deposit. It all depends on exactly where the home is.
Why Does the Agent Get the Deposit and Not the Seller?
As a buyer, you can potentially lose your deposit money if the seller vanishes with your deposit or is forced to declare bankruptcy. You are protected and potentially able to get your money back if anything like that happens when the real estate broker holds real estate deposits in trust.
Does Seller Have to Return Deposits If a Buyer Isn’t Happy With the Home Inspection?
Both the seller and the buyer have to agree for any deposits to be returned to the seller. However, a seller can refuse to release the deposit if they believe the buyer didn’t act in good faith or wasn’t approved for a mortgage, despite assurances they would be. The downside is that the money may be tied up for several years in the trust account held by the broker. Making a small deposit at the time an offer is accepted, and then paying the balance of the deposit amount when the condition has been satisfied can prevent this from happening.
Problems with real estate deposits can be time-consuming and costly, and it’s important to understand the guidelines.
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