Have a look at the Deposit clause in the standard Form Agreement of Purchase and Sale:
“………….by negotiable cheque payable to ……………………………………………………………………………………………………………. “Deposit Holder” to be held in trust pending completion or other termination of this Agreement and to be credited toward the Purchase Price on completion…….The parties to this Agreement hereby acknowledge that, unless otherwise provided for in this Agreement, the Deposit Holder shall place the deposit in trust in the Deposit Holder’s non-interest bearing Real Estate Trust Account and no interest shall be earned, received or paid on the deposit.”
Deposit Holder
The usual expectation is that this will be the Listing Brokerage. If there is no Listing Brokerage because the Seller is a FSBO (for sale by owner), now a Self-represented party under TRESA, 2002, then the Buyer’s agent’s Brokerage could hold the deposit.
As well, the deposit could be held by the Seller’s lawyer, or the Buyer’s lawyer or even a neutral third party.
Interest on the Deposit
First of all, there is none. Absolutely “zero”. That’s what it says!
If you want interest, then the Agreement would have to provide otherwise.
Usually, this will be set out in Schedule “B” supplied by the Listing Brokerage. If you are looking for interest, then you will have to ensure that the Deposit holder is agreeable.
The amount of interest may not be significant if it is a small deposit with a short closing, however, it becomes increasingly of greater importance should the transaction not close, and the parties become engaged in extended litigation. The amount and the rate of interest would be important.
Brian Madigan LL. B., Broker