In most residential real estate transactions, the purchasers will pay a deposit to their real estate brokerage upon their offer being accepted.
The deposit is usually paid within a specified timeframe following the seller’s acceptance of the offer, and prior to subject conditions being removed. There is no legislated or mandatory timeframe for payment of a deposit or the minimum amount for a deposit. These issues are determined by the parties when negotiating the contract of. Failure to provide the deposit within the required timeframe can result in termination of the contract.
If the subject conditions are removed and the transaction completes, the deposit will be applied to the purchase price, and will be accounted for on the Purchaser’s Statement of Adjustments.
If the transaction does not complete, the real estate brokerage must have the written consent of both the buyer and seller before releasing the deposit. If there is a dispute regarding a party’s right to terminate the contract, this may delay the release of the deposit.
Real estate brokerages will normally provide a release for execution by the parties. In addition to authorizing the release of funds, the release may also include terms releasing any claims the parties may have against each other. If you are executing a release relating to a deposit, it is prudent to obtain legal advice to understand the implications of the document.