Deposit Holder: What is their status?

Buyer's Deposit For Real Estate Property in Ontario - TR Law Firm Blog



The Seller has either their Listing Agent, the Brokerage or their solicitor hold the deposit. Are they not both subject to agency laws, such that they have to follow the Seller’s directions?


Very interesting question. You are right, both the Listing Brokerage and the Seller’s solicitor are subject to the laws of agency when it comes to their relationship with the Seller.

However, the Seller has nominated both of them in different capacities here when it comes to the deposit.

And, the Buyer has agreed.

Each of the two will act as Trustees when it comes to the deposit. Trust law will apply.

The Trustee will hold the deposit in trust on behalf of BOTH parties, not one.

In carrying out their respective responsibilities as Trustees, in addition to trust law as set forth as part of the common law, a Brokerage will be governed by REBBA 2002 and a solicitor will be governed by the Solicitors Act.

It is simply coincidence that they also happen to be agents for the Seller too.

An independent party like a Trust Company could have been nominated for this purpose.

Once the Buyer has agreed to the release of the deposit in their hands and the terms of the trust have been satisfied, then, they are subject to the rules of agency and the Seller alone may direct the funds. The trust obligations are complete at that point.

Brian Madigan LL.B., Broker

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