Be sure when buying...
Some time ago, I invited Mark Weisleder as the guest speaker to my Real Estate Mastermind Group known as the S.T.A.R Group (Strategic Alliance Referrals). We are a group of Realtors and Mortgage Brokers that cover the whole of South Western Ontario and can help you or anyone you know who needs to buy sell or Invest in Real Estate across the province. I am a founding member and aside from covering the Toronto, North York, Thornhill, and Richmond Hill areas, I direct clients to the appropriate communities across Ontario.
Mark is a very well known Toronto Real Estate Lawyer, Author, instructor, Toronto Star columnist and keynote speaker for the real estate industry. He recently wrote this article about what happens to the deposit if a house deal falls apart because the Buyer can't close, and the seller then sells the property to someone else for more.
What happens to the Deposit?
Here’s what can happen:
In early September 2003, Shankar Iyer and Bala Ramachandran agreed to pay $289,000 for a new home from Pleasant Developments Inc. They accompanied their offer with a $10,000 deposit and the builder accepted it on September 16. The buyers got cold feet and the next day changed their mind, asking for the return of the deposit.
The builder refused to return it and resold the house for $700 less than the original deal, but kept the deposit. The couple sued in Small Claims Court for the return of the deposit. When it came to the hearing, the question for the court was whether the builder could keep it all. The judge decided the builder could only keep $700 - the amount by which the sale was reduced - and was ordered to give the balance of $9,300 to the buyer.
The builder appealed. Three years later, Judge Brown of the Ontario Superior Court of Justice decided the builder could keep the entire deposit, even though he did not suffer any loss."
Mark goes on to explain some important lessons for Buyers.
- Understand what your rights are before you sign a real estate contract and make a deposit.
- If you are a buyer, understand that once an agreement is signed and accepted, you cannot simply change your mind, even one day later.
- If a buyer defaults on their obligations, then not only can the seller sue for any damages, they can in most cases sue for the deposit, even if they have suffered no damages at all.
- If a matter goes to court, any deposit will remain in the real estate brokerage trust account until the parties sign a mutual release or the matter is decided by a court, which in this case, took more than 2 years.
If you are thinking about buying a home, let's talk. Let me explain the entire Home Buying Process and help guide you and keep you safe with your Home Purchase!
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