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Q: I have a strong willingness to buy a house, but the seller wants me to pay a large deposit. If I change my mind in the future, can I get the deposit back?
A: the simple answer to this question is that in most cases, the deposit on real estate transactions is non-refundable.
However, there is never a fixed requirement for a deposit, and if the seller wants to collect a large deposit, it is the key to the success of the transaction. You can ask the real estate agent to try to negotiate a lower deposit with the seller.
The deposit is mainly used to ensure the house you want to buy and to express your sincerity and serious commitment. once the seller accepts your written offer (Offer), it will become a legally binding sale and purchase agreement. After signing the sale and purchase agreement and paying the deposit, it is very unwise to try to breach the contract on the ground that “I’m sorry, I’m no longer interested”. You will almost certainly lose all the deposit. If the seller ends up selling the house at a lower price than your offer, the seller may also recover the loss of the price difference from you, as well as additional legal fees and transaction costs. You don’t want this.
The deposit is not absolutely non-refundable, if the buyer’s Offer has set conditions, and then the conditions are not met, the deposit can sometimes be refunded to the buyer. For example, your offer comes with mortgage conditions, but your bank fails to approve the mortgage; or your purchase depends on the successful sale of the home, but the current home is not sold in time; or, your purchase depends on whether the results of the inspection are met, and then the surveyor finds a problem in the house that can deter you.
If you cannot complete the transaction because the conditions are not met and you want to get the deposit back, you must sign a cancellation form, which must be signed by the seller. This is a clear procedure and sellers usually do it together, but if sellers suspect that your actions are insincere, they can refuse to refund the money.
So what happens after that? The deposit is usually kept in the trust account of the seller’s brokerage company, and the dispute between you and the seller will be referred to the court. If you can’t reach an agreement with the seller, the judge will eventually be able to release the deposit by court order, but I warn you: it will take a long time. It is not true that the seller can pocket the buyer’s deposit whenever the deal fails. Cases with a deposit of $25000 or less can be referred to the small claims Court for adjudication. The costs involved are relatively cheap and can be easily used by Ontario residents in general. The deposit involving a large amount of money has to be formally dealt with by the Ontario High Court. The cost of legal proceedings can be very high, so you should consider all the circumstances carefully.