A property sells for $750,000.00 and the Buyer’s agent brings a deposit for $750,000.00 with the balance of the purchase price paid on closing.
Are there any implications here, or is this all right?
On the issue of the deposit, there really isn’t one. That’s a problem. In fact the full purchase price has been paid upfront and is misdescribed in the Agreement as a “deposit”.
Deposits are forfeited for breach of contract or non-completion. Deposits cannot be a penalty. A deposit of 100% would be a penalty. A deposit of up to 20% is usually allowed. Deposits over twenty percent deposits are “at risk”.
This particular transaction calls for a deposit, so you need to have:
1) a lower, specified deposit, and
2) a further payment being the balance of the purchase price held in trust, but essentially returnable, but not forfeited.
Brian Madigan LL.B., Broker