Deposits in Conditional Deals

Do You Read Terms Of Service Contracts? Not Many Do, Research Shows : NPR

Question:

No deposit delivered on conditional deal. Does the buyer need a mutual release?

I am certain the Seller does not plan to resell, and also the fact that the Buyer is in breach of contract. Even if the deal is conditional, can it be a fairly straightforward to obtain a summary judgment against the buyer?

I am just not sure of the risk if the buyer doesn’t get a mutual release signed by the seller, or does the deal automatically become null and void and no mutual release is required because the deposit was not delivered?

Answer:

The Buyer is in breach for failure to deliver the deposit.

The Buyer is likely also in breach for failing to take steps to satisfy the conditions. That would make the amount of the deposit to be the Seller’s minimum finacial loss, without any proof required. So, the Seller doesn’t need to sell to prove damages.

No, the contract has not become “null and void”.

It can be terminated by the Seller at their option. So, at the moment “no news is good news”. Why ask the question? Then again, the Seller does have two years to sue, so, the Buyer might acquire something else, and then have the Seller surface in a few years.

There is some value to have a release from the Seller, but I’m sure that the Buyer doesn’t want to pay any money to get it. Let’s just hope that the Seller has a lawyer and/or agent who says something like “going after the buyer is just too much trouble”. Best not to have the lawyer who says “that’s wonderful, that’s just like winning lotto”.

The big risk out there is that the Seller has evidence that the Buyer did not proceed in good faith to satisfy or waive the conditions.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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