Humber/Ontario Real Estate Course 4 Exam Practice

When calculating the balance due on closing for an agreement with multiple deposits:

1. Total deposits are deducted from the purchase price

2. Only the initial deposit is deducted from the purchase price

3. Deposits are not considered in closing balance calculations

4. Only deposits submitted 'herewith' or 'upon acceptance' impact the balance

5. Each deposit must be verified separately

6. Deposits are pooled and deducted in a lump sum

The correct answer is: Total deposits are deducted from the purchase price

The correct option highlights the process of subtracting total deposits from the purchase price when calculating the balance due on closing. This approach reflects the principle that all funds deposited by the buyer are effectively credited against the total purchase price. When multiple deposits are made, whether they are initial, interim, or final deposits, they all contribute cumulatively to the total funds that a buyer has already committed towards the purchase. By deducting the total amount of these deposits from the purchase price, you arrive at the net balance that remains due at closing. This is essential for ensuring that the seller receives the proper payment, accounting for all financial commitments made by the buyer previously. Other options present limited perspectives; for example, only considering the initial deposit would misrepresent the actual financial commitment of the buyer, while stating that deposits are not considered at all ignores their critical role in the transaction. Therefore, recognizing the total deposits as a deduction from the purchase price not only ensures accuracy in closing calculations but also aligns with standard real estate practices.