Humber/Ontario Real Estate Course 3 Exam Practice

Which requirement must be met for a deposit cheque in an agreement of purchase and sale?

1. Requires that the deposit cheque be certified.

2. Requires that the deposit cheque be negotiable.

3. Specifically states that the deposit must be certified.

4. Requires that the deposit cheque be certified if a co-operating brokerage is involved with the transaction.

5. Requires that the deposit cheque be non-negotiable.

6. Specifically mentions that cheque certification is optional.

The correct answer is: Requires that the deposit cheque be negotiable.

In an agreement of purchase and sale, the requirement for a deposit cheque primarily revolves around its negotiability. A negotiable cheque is one that can be transferred to another party and can be presented for payment without undergoing additional formalities, thus providing assurance to the recipient (usually the seller or their agent) that the cheque will be honored when presented. This aspect of negotiability is important in real estate transactions, as it ensures that the funds can be accessed without complications or delays. A certified cheque, while often preferred for its guarantee of funds, is not always a strict requirement in every transaction; the focus is more on the ability to negotiate the payment rather than on it being certified. Understanding that the primary necessity is for the cheque to be negotiable helps in applying this knowledge to various real estate situations, ensuring that the deposit is both valid and effectively communicates the intention of the buyer to proceed with the purchase.