All about Real Estate Deposits
In British Columbia, deposits are an essential aspect of real estate transactions. They serve as a sign of good faith and a commitment from the buyer to the seller. In this article, we will discuss everything you need to know about deposits in a real estate transaction in BC.
What is a Deposit?
A deposit is a sum of money paid by the buyer to the seller when an offer is made on a property. The deposit shows the seller that the buyer is serious about purchasing the property and is willing to commit to the purchase. The amount of the deposit is typically a percentage of the purchase price, and it can vary based on the type of property being purchased and the terms of the sale.
Who Holds the Deposit?
Once the deposit is paid, it is held in trust by the real estate brokerage handling the transaction. The brokerage must deposit the funds into a trust account that is separate from their general business account. This ensures that the funds are secure and cannot be used for any other purpose.
When is the Deposit Paid?
The deposit is usually paid within 24–48 hours of the removal of all conditions on an accepted offer. The funds can be paid by certified cheque, bank draft, or wire transfer. It is important to note that the deposit is separate from the down payment, which is typically paid at the time of closing, via the lawyer. Remember that your bank may have a delay in printing a bank draft... banks like "Tangerine" or "PC Financial" may have a 3-4 day delay in getting those printed.
What Happens to the Deposit if the Deal Falls Through?
If the deal falls through, the deposit will be returned to the buyer. However, there are certain circumstances in which the deposit may be forfeited to the seller. For example, if the buyer breaches the contract by failing to complete the sale, the seller may be entitled to keep the deposit as compensation for any losses they may have incurred.
It is important to note that the terms regarding the deposit are outlined in the Contract of Purchase and Sale, which is a legally binding agreement between the buyer and the seller. It is essential to review the contract thoroughly with the help of a real estate lawyer before signing to ensure that you understand the terms and conditions.
In conclusion, deposits are an essential aspect of real estate transactions in British Columbia. They serve as a sign of good faith and a commitment from the buyer to the seller. If you are planning to purchase a property in BC, it is essential to understand the role of deposits in the process and work with a trusted real estate agent and lawyer to ensure a successful transaction.
Quick Info: If you are a buyer working with a CityNest agent, the best way to submit your deposit is with a Bank Draft made out to "RE/MAX CAMOSUN - In Trust". If this is not possible, or you are not in the city, we have 2 other ways to submit a deposit remotely... just download this PDF: RE_MAX_Camosun_Deposit_Instructions_Nov_2022.pdf