Question:
A property sold last night (May 3rd, a Friday at 9:00 pm) conditional on financing and inspection. Conditions expire on May 6th at 11:59. When is the deposit due?
I am concerned since there is another Offer from a second interested Buyer.
Answer:
What does the Agreement of Purchase and Sale say about the deposit deadline:
- “herewith”, then you are already are supposed to have it,
- “upon acceptance”, that means 23:59:59 hours, (8:59:59 pm on Saturday)
- “as otherwise described”, then whatever time limit was placed in Schedule A.
The time in the Confirmation of Acceptance is likely incorrect.
If you have another Offer, then “terminate” for failure to deliver the deposit in time. That’s breach of contract. You can sell for more money and keep the profit. There is no extension by reason of the conditions. There is no exemption from liability by reason of the conditions.
Also, the Seller can sue for the unpaid deposit. The termination needs to take place before any conditions in the Agreement of Purchase might arise, otherwise the Seller has lost the opportunity. Ahead of time, it’s just like winning the lotto! Afterwards, the Agreement might be “null and void”. So, the opportunity for the Seller is limited in time.
Comment
It is unfortunate that many real estate agents are unaware of the law related to deposits. In this case, the Buyer’s agent came up with the deadline, and the Buyer might not be able to get the deposit in “on time”, meaning an immediate breach of contract and a liability for payment without the opportunity to purchase the property. That’s not good. Always use “as otherwise provided” and select a time deadline that your client can meet.
Brian Madigan LL.B., Broker