Humber/Ontario Real Estate Course 3 Exam Practice

In the event of failing to secure financing and seeking deposit return, what step is necessary?

1. The buyer and seller need to sign a notice of termination.

2. Signing a mutual release is essential along with the notice of termination.

3. The brokerage must automatically return the deposit upon notice of termination.

4. A signed waiver is needed to initiate the deposit return process.

The correct answer is: Signing a mutual release is essential along with the notice of termination.

In a scenario where a buyer fails to secure financing and requests the return of their deposit, it is crucial to have a mutual release signed in conjunction with a notice of termination. This process ensures that both parties—the buyer and the seller—officially agree to terminate the agreement. The mutual release documents the understanding that the contract is concluded and that the deposit will be returned to the buyer without any disputes. Simply having a notice of termination on its own would not be sufficient, as it merely indicates the desire to end the contract but does not address the status of the deposit or the responsibilities of the parties involved. By securing a mutual release, both the buyer and seller confirm that they are relinquishing any claims against each other related to the transaction, thereby facilitating the return of the deposit in a legally sound manner. The other options may suggest various actions regarding the return of the deposit, but they do not encompass the necessary legal framework provided by the mutual release. A mutual release ensures clarity and resolution in the transaction, making it the essential step when requesting a deposit return after failing to secure financing.