Here’s a clause being used by some Listing Brokerages, as set out in their Schedule B’s:
“Once this Agreement becomes unconditional, should the Buyer fail to complete this agreement on the completion date, at no fault of the Seller, the deposit, together with any interest thereon shall be deemed to be released by the Buyer and paid forthwith to the Seller by the deposit holder, without deduction. Such payment shall be in part-satisfaction of the Seller’s damages and Seller reserves all of Seller’s right to claim further additional damages against the Buyer. Under no circumstances shall this amount be recoverable by or paid back to the Buyer. This clause shall constitute the Buyer’s irrevocable consent to release such deposit and no further written release shall be required.”
Actually, this is an interesting situation. This Brokerage seeks to make it easier for Sellers by increasing their rights and leverage related to deposits. The law of deposits goes back 2,000 years to Roman times, and has been applied as recently as last week by the Ontario Court of Justice. Nevertheless, this Brokerage knows what the law should be better than the Courts. It would be unwise for the Brokerage to act for a Buyer with this clause in the Agreement of Purchase and Sale. Over one and a half million transactions have taken place over the last decade using the existing OREA Agreement of Purchase and Sale without this clause.
This clause still needs a little work to accomplish what they would propose, but I am not going to comment further or they will go ahead and make the required changes.
Better not to try to change the laws that have applied to sellers and buyers for hundreds of years.
Brian Madigan LL.B., Broker