Humber/Ontario Real Estate Course 3 Exam Practice

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Which statement is correct regarding deposits for an agreement of purchase and sale?

  1. The initial deposit is indicated on Schedule A of the agreement of purchase and sale.

  2. A supplementary deposit does not affect the balance due on closing.

  3. A buyer providing a supplementary deposit can make it subject to a condition being fulfilled or waived in the agreement of purchase and sale.

  4. An agreement of purchase and sale can contain up to two deposits: the initial deposit and one supplementary deposit.

  5. A deposit must be at least 10% of the sale price.

  6. Deposits are required for all types of real estate transactions.

The correct answer is: A buyer providing a supplementary deposit can make it subject to a condition being fulfilled or waived in the agreement of purchase and sale.

The correct statement regarding deposits for an agreement of purchase and sale is that a buyer providing a supplementary deposit can make it subject to a condition being fulfilled or waived in the agreement of purchase and sale. This reflects the flexible nature of real estate transactions, where parties can negotiate specific terms and conditions tied to deposits. In many cases, a supplementary deposit may not only secure a commitment from the buyer but also may be contingent upon certain conditions being met, such as the successful completion of a home inspection or the buyer securing financing. This allows buyers to protect themselves and ensure that certain prerequisites are fulfilled before the additional funds are transferred, thereby providing a level of assurance and control in the transaction process. Regarding the other choices, while certain aspects of those statements may contain elements of truth, they do not accurately capture the correct nature of how supplementary deposits can be utilized within an agreement of purchase and sale. For instance, it is not standard for all agreements to contain two deposits or for deposits to have a minimum percentage requirement; these details can vary based on the specifics of the transaction and the negotiations between the parties involved.

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