Humber/Ontario Real Estate Course 4 Exam Practice

What must be included in the agreement of purchase and sale regarding interest on trust account funds?

1. All interest must go to the beneficial owner, usually the buyer

2. The deposit cannot be transferred electronically

3. Funds cannot be in an interest-bearing security

4. Terms on how interest is to be paid

5. Interest should be paid to the brokerage

6. Interest must be paid to the seller alone

The correct answer is: Terms on how interest is to be paid

The correct choice addresses the requirement for the agreement of purchase and sale to specify the terms related to the payment of interest on trust account funds. Including terms on how interest is to be paid ensures clarity and transparency for all parties involved in the transaction. This provision is essential because it defines how any interest accrued from the deposit in the trust account will be handled, which can prevent disputes down the line. For example, the agreement can clearly outline whether the interest will be paid to the buyer, the seller, or any other party, and the method or timing of that payment. Having specific terms about interest safeguards the interests of all parties and adheres to the regulatory standards in real estate transactions, which require all financial aspects to be clearly outlined in agreements.