Throw More Money into the Deal, But Not as a Deposit

Best Lawsuit Protection - Premier Offshore Company Services

Throw More Money into the Deal, But Not as a Deposit

Question:

I am acting for a Buyer, and I would like to demonstrate some additional good faith and hopefully outbid some others. We already have a reasonable deposit at 5%, but how do I increase the amount without increasing the deposit.

Here’s a clause for consideration:

“The Buyer agrees to deposit with the Brokerage a further sum of Dollars Fifty thousand ($50,000.00), by negotiable cheque, at the time of notification of fulfilment or removal of the condition pertaining to Home Inspection, to be held in trust pending completion or other termination of this Agreement. This amount is to be credited towards the purchase price on completion of this transaction.”

Answer:

Let’s try something like this:

“The Buyer agrees to deliver to the Brokerage a further sum of Fifty thousand Dollars ($50,000.00), by negotiable cheque, within 24 hours of receipt of  the Notice of Fulfillment or removal of the condition pertaining to Home Inspection, whereby this Agreement becomes unconditional (Saturdays, Sundays and Statutory holidays excluded) to be held in trust as part payment of the purchase price and not as a deposit, pending completion or other termination of this Agreement. This amount is to be credited towards the purchase price on completion of this transaction.”

The clause above:

  • Specifies timing for delivery of the additional funds
  • Extends the time limit over weekends
  • Uses the start of the “unconditional period as the trigger
  • Confirms that it is part payment of the purchase price
  • Confirms that it is not a deposit

The clause could be broadened with to respect to any of these issues, and naturally it would still work.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

Leave a Reply

Your email address will not be published.