Many people have the misconception that if the Buyers do not bring the deposit cheque, the deal is null and void. That is wrong! Whether or not the deal is firm, not bringing the deposit cheque is always the wrong course of action.
If the deal is conditional still
If you purchased a home conditionally, you cannot “get out of the deal” by not bringing the deposit cheque. Legally, you have to prove that you purchased the home with the intent to close. A conditional sale can only be canceled by the Buyer if they fail to complete the conditions of the sale. That could include the Buyer not being able to get satisfactory financing, or a home inspector finding a defect in the home.
If the deal is firm
If the deal is firm, the Buyer cannot rescind their contract without penalty, regardless of whether the Sellers have their deposit cheque.
For example, imagine the Sellers sold their home for $1 million, and the Buyers tried to rescind their contract. If the Sellers sell for $950,000 the following month, they can sue the Buyer for the price difference plus carrying costs and legal fees. However, if the Sellers sell for $1 million or more, the Buyer’s actions did not cause them financial loss, and so they can’t ask for compensation.
It’s important to note that the Buyers are on the hook for the total difference between their initial offer and the final sale price. In Vancouver, the court recently awarded Sellers $350,000 for the difference between the first and final sale prices. The Sellers can come after the Buyer for more than the deposit cheque amount.
IMPORTANT! Do you sign a mutual release?
Not bringing a deposit cheque does not mean a contract is null and void, but once a mutual release is signed the contract is dead. If a mutual release is signed, it releases all parties from the contract and any legal liability that was attached to that contract. If the Sellers sign a mutual release, the Buyers are free from all expectations, and the Sellers can’t pursue damages.
sometimes there's nothing you can do
Sometimes you just have to pick up your boots and move on. We sold a home 4 years ago, and the deposit never came. FINTRAC had confiscated the money on suspicion of money laundering. Even if our clients had the deposit money in our brokerage’s trust account, the government agency would have confiscated it. We couldn’t pursue damages because the Buyers disappeared, and the money was laundered.
A good Realtor can ensure your interests are protected at all times. Buying and Selling is simple, until it isn’t and that’s when you wish you hired a professional at the start. If you’re thinking of making a move, please don’t hesitate to contact us.