Humber/Ontario Real Estate Course 4 Exam Practice

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Which statement is true regarding deposits for an agreement of purchase and sale?

  1. A buyer providing a supplementary deposit can make it subject to a condition being fulfilled or waived in the agreement of purchase and sale.

  2. A supplementary deposit does not affect the balance due on closing.

  3. An agreement of purchase and sale can contain up to two deposits: the initial deposit and one supplementary deposit.

  4. The initial deposit is indicated on Schedule A of the agreement of purchase and sale.

  5. All deposits are refundable until closing.

  6. The deposit must be held in interest-bearing trust accounts.

The correct answer is: An agreement of purchase and sale can contain up to two deposits: the initial deposit and one supplementary deposit.

The statement regarding the ability of an agreement of purchase and sale to include up to two deposits — the initial deposit and one supplementary deposit — is accurate because real estate transactions often involve both types of deposits. The initial deposit is typically made when the offer is presented to demonstrate the buyer's seriousness, while a supplementary deposit may be required later in the transaction as a condition or part of securing the deal, enhancing the buyer's commitment before closing. This structure allows flexibility in negotiations and can assist in managing cash flow for both parties. It's important to recognize that while standard practices exist, the specifics can vary based on the terms outlined in the agreement. The presence of an initial and a supplementary deposit is a common arrangement in Ontario real estate transactions, reflecting standard practices and the strategic financial commitments made by buyers. In contrast, the other statements could misrepresent the norms or regulations concerning deposits, such as suggesting only one deposit type could exist or mischaracterizing the terms under which deposits can be made. Understanding these deposit types helps clarify the financial expectations and obligations involved for all parties in a transaction.

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