Humber/Ontario Real Estate Course 3 Exam Practice

What must a salesperson do with a deposit cheque if a buyer's offer is not accepted by the seller?

1. Return it to the buyer immediately after the seller's refusal.

2. Send it to an escrow account for safekeeping.

3. Split it between both parties to cover negotiation costs.

4. Deposit it in the trust account and refund it later.

5. Keep it as a finder’s fee for the transaction.

6. Use it towards another property purchase.

The correct answer is: Send it to an escrow account for safekeeping.

In the context of real estate transactions, when a buyer's offer is not accepted by the seller, the handling of the deposit cheque is crucial. Sending it to an escrow account for safekeeping is the correct approach because it ensures that the funds remain secure and are protected throughout the negotiation process. An escrow account acts as a neutral third party that holds the deposit until a clear agreement has been reached or until the parties decide what to do with the funds. This method also provides transparency and accountability, as it ensures that neither party is at risk of losing the deposit until the transaction's outcome is determined. This is crucial in maintaining trust between the buyer and seller. If the offer is rejected, the funds in the escrow account can be easily refunded to the buyer without any complications, maintaining the integrity of the transaction. The other options suggest actions that either do not provide proper security for the buyer's funds or imply that the salesperson should benefit from the situation, which is not ethical or in line with real estate practices. By using an escrow account, the salesperson upholds their responsibility to protect the buyer's interests.