Humber/Ontario Real Estate Course 4 Exam Practice

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When a buyer includes a deposit with their agreement of purchase and sale, how does it generally function?

It ultimately forms part of the downpayment.
It must be paid through a certified cheque only.
It cannot be submitted 'upon acceptance' but can be 'herewith' or 'as otherwise described in the agreement.'
It can be paid via electronic funds transfer, but not by bank draft.

The correct answer is: It ultimately forms part of the downpayment.

When a buyer includes a deposit with their agreement of purchase and sale, it generally functions as part of the downpayment. The deposit is a commitment from the buyer to demonstrate serious interest in the property they wish to purchase. By placing a deposit, the buyer is showing the seller that they are willing to secure the property and proceed with the transaction. In practice, this deposit will typically be applied towards the downpayment amount that the buyer is required to pay as part of the purchase. It signifies a portion of the total amount the buyer needs to pay and indicates their intention to proceed with the purchase.