Deposits

Bank Draft or Certified Cheque

Why do we need a deposit with an Offer? 

It is a show of good faith that the buyer intends to close their purchase transaction with the seller. There is no specific requirement for how much the deposit needs to be, but in big markets, 5-6% is desirable to sellers. More than that may be offered to the seller to show their strength in financing. 

When an Agreement of Purchase and Sale has been signed by all parties, typically a deposit will need to be delivered to the listing brokerage in a specific amount of time.

The Agreement may say "Upon Acceptance", "Herewith", or "As otherwise agreed",  and there are different timelines that apply.

• Upon Acceptance: the deposit will be delivered within 24 hours after acceptance. That means that it's 24 hours, not business days. If that means it's on a Sunday, that's how it goes. Appropriate adjustment to verbiage is needed if the Buyers cannot deliver it on Sundays. 

• Herewith: the deposit will be delivered immediately after acceptance. Typically this applies in multiple-offer scenarios where buyers show they are ready to hand it over to the seller's brokerage if their offer is accepted. Sellers like this, and ensures that there will not be a problem where the Buyer does not deliver it as agreed. 

• As otherwise agreed: the deposit may take more than 24 hours to be delivered to the listing brokerage, so this would require specific verbiage to clarify the timelines. 

It is important to understand that once an Offer is accepted by all parties, the deposit is due in the timeline agreed to. If the buyer does not deliver it by the due date/time, they are considered to be in a legal breach, and the Seller has powers available to them to pursue legal action, and/or potentially sell to another Buyer. This is a very complex scenario, so it is best to ensure funds are available to deliver it on time.