Humber/Ontario Real Estate Course 3 Exam Practice

Under the terms of an agreement of purchase and sale, how can a deposit be managed?

1. A:The deposit must be held by the listing brokerage.

2. B:The deposit can be held by either the listing brokerage or a lawyer.

3. C:The deposit is automatically protected by Tarion.

4. D:Multiple amounts over a period of time are acceptable.

5. E:The deposit is always a single amount.

6. F:The buyer receives the deposit back immediately.

The correct answer is: D:Multiple amounts over a period of time are acceptable.

The correct approach to managing a deposit under an agreement of purchase and sale allows for flexibility, which aligns with the understanding that multiple amounts over a period of time are acceptable. This means that a buyer might agree to make a series of deposits instead of a single lump sum. This arrangement can be beneficial in various scenarios, such as when the buyer and seller negotiate terms that include staged payments to secure a property while allowing the buyer time to arrange financing or complete due diligence. In real estate transactions, it is common for agreements to specify the timing and structure of deposits, which can be tailored to meet the needs of both parties. This practice helps to create a more accommodating and mutually beneficial agreement, especially in competitive markets where buyers may need to demonstrate their intent without committing fully upfront. The other options outline practices that either do not adequately reflect the common practices in real estate transactions or misinterpret regulatory frameworks. For example, deposits can be held by various parties, not just the listing brokerage, ensuring that there is flexibility in the transaction process. Tarion’s protections are specifically for new homes and associated warranties, whereas the nature and structure of deposits are governed by the terms agreed upon by the buyer and seller. Thus, emphasizing multiple deposit amounts is an essential aspect of modern