Humber/Ontario Real Estate Course 3 Exam Practice

What must be included when a deposit is held in trust as stated in the purchase and sale agreement?

1. The deposit is held in trust without any interest.

2. Interest accrual must be specified in the agreement.

3. The deposit must be made within two business days.

4. The deposit can be released with mutual agreement from both parties.

5. The deposit should be non-refundable under all conditions.

6. The deposit is kept with the employing brokerage only.

The correct answer is: The deposit can be released with mutual agreement from both parties.

The correct choice highlights an essential aspect of real estate transactions regarding deposits held in trust. When a deposit is made, it signifies a commitment by the buyer to purchase the property. The stipulation that the deposit can be released with mutual agreement from both parties ensures that both the buyer and the seller have control over the funds. This mutual consent is crucial because it protects both parties' interests: if unexpected circumstances arise, such as issues with the property's condition or financing challenges, both parties must agree on the release of the funds to ensure fairness and transparency in the transaction. In the context of the other options, the mention of interest accrual being specified (which is an important detail but not primary in every agreement) does not encompass the overall principle of trust in transactions. While timing for deposit submissions is relevant, the real focus is on the handling and conditions under which that deposit is managed. The statement regarding the deposit being non-refundable under all conditions disregards situations where mutual consent is applicable, which would not be in line with fair practices in real estate. It's also relevant to note that while the deposit would typically be secured by the brokerage, the requirement for mutual agreement upholds the integrity of the trust process in real estate agreements.