Humber/Ontario Real Estate Course 4 Exam Practice

Which statement is correct regarding the deposit in an agreement of purchase and sale?

1. Must be held by the listing brokerage.

2. Must be held either by the listing brokerage or a lawyer for the buyer or seller.

3. Is automatically protected by the Tarion Warranty Corporation.

4. Can consist of a single amount or multiple amounts paid over a period of time.

5. Must be placed in a trust account by the listing brokerage.

6. Must be paid in a single lump sum.

The correct answer is: Can consist of a single amount or multiple amounts paid over a period of time.

The statement about the deposit in an agreement of purchase and sale being able to consist of a single amount or multiple amounts paid over a period of time is correct because real estate transactions are flexible and can accommodate different financial arrangements. When parties are negotiating the terms of a sale, they can agree on how the deposit will be structured. This could involve an upfront lump sum followed by additional payments or several smaller payments leading up to the closing date. This flexibility allows buyers to manage their cash flow more effectively, especially in negotiations where financial circumstances vary. It also reflects the market's understanding that not all buyers will have the entire deposit amount available at once due to various reasons, such as personal finance management or purchasing multiple properties. Thus, various arrangements can be made as long as both parties come to a mutually agreeable understanding in the agreement.