Humber/Ontario Real Estate Course 3 Exam Practice

If Buyer Williamson cannot secure financing and desires his deposit back after the 10-day conditional period, what should the brokerage do?

1. Automatically return the deposit

2. Release the deposit with mutual party consent

3. Release the deposit with broker of record approval

4. Return the deposit without written authorization

5. Hold the deposit until a new buyer is found

6. Deposit the funds into an escrow account

The correct answer is: Release the deposit with mutual party consent

The correct answer indicates that in order to release the deposit back to Buyer Williamson after the defined conditional period, there must be mutual consent from both parties involved in the transaction. This is significant because the deposit serves as a source of security for the seller that the buyer will follow through with the purchase. In real estate transactions, deposits are often held in trust until the conditions specified in the agreement are fulfilled or unless both parties agree otherwise. In this scenario where the buyer cannot secure financing, simply releasing the deposit without agreement could lead to disputes. Hence, obtaining mutual party consent ensures that both the buyer and seller acknowledge and agree to the release of the deposit, providing clarity and avoiding potential conflicts. Other options involve actions that may not align with the legal and ethical requirements of real estate practices. For example, returning the deposit automatically could create liability for the brokerage, while releasing the funds without mutual consent can lead to disputes or claims of improper handling of trust funds. Holding the deposit indefinitely is also not a standard practice unless there are unresolved issues that require further negotiation. Therefore, mutual consent serves as the proper and prudent course of action in this situation.