Humber/Ontario Real Estate Course 4 Exam Practice

What would happen to a deposit cheque if the seller refuses the buyer's offer on the irrevocable date and negotiations are concluded?

1. Can only be returned to the buyer with mutual agreement of both buyer and seller.

2. Must be deposited in the real estate trust account on the irrevocable date with a subsequent cheque issued back to the buyer.

3. Would be returned to the buyer immediately following the seller's refusal.

4. Would have already been deposited on the offer signing date.

5. Will be held by the seller until further negotiations occur.

6. Must be retained by the agent until the property is sold again.

The correct answer is: Would be returned to the buyer immediately following the seller's refusal.

The correct answer indicates that the deposit cheque would be returned to the buyer immediately following the seller's refusal. This reflects the standard practice in real estate transactions regarding deposit cheques when an offer is not accepted. In the context of real estate transactions, a deposit cheque typically serves as a demonstration of the buyer's earnest intention to purchase the property. If the seller refuses the offer, especially on or after the irrevocable date, the rationale is that there is no longer any binding agreement to uphold, which allows for the prompt return of the funds to the buyer. This is a crucial part of the negotiation process as it ensures that the buyer is not penalized or left in a limbo situation with their deposit when their offer has been declined. Understanding this process is important for both buyers and sellers, as it helps clarify how funds are managed during negotiations and reinforces that, without an agreement in place, any deposits made are not considered to be at risk. This protects the buyer's interests while fostering a clear and fair negotiation atmosphere.