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The question
If you could clarify something for me it would be much appreciated. We sold
our property late last year and are due to close next week, the buyer is
starting to ask for extensions etc... the buyer put down a large deposit now my
question is this: if the transaction is NOT completed by the Purchaser who gets
the deposit? I was told the Realtor takes what would have been their "potential"
commission out of the sale and the remainder would be dispersed to us it this
correct?
was posed by Anonymous on my original post "
Backing out of a real estate deal ?". This is a commonly asked questions and the answer is not as cut and dry as I would like.
In Ontario, Canada, the basic answer is that the deposit stays in the trust account until the buyer and the seller can come to an agreement on how it is to be dispersed, or until there is a court order stating how it will be dispersed. In most cases the funds are given to the party that still wants to close the sale, in this question that would be the seller, however it is not guaranteed.
So if the buyer backs our of the real estate deal they have two options. They can sign a mutual release noting that all or part of deposit is to be dispersed to the seller. Or they can let it go to court and have the courts decide how it will be released. In the first case the seller has to agree but the seller may be giving up any rights to further actions against the buyer should they not be able to sell the home without incurring a loss (relative to the original agreement). Going through the courts though will take more time and lawyer fees but may end up with the seller (in this case) getting more money or compensation.
Always consult your lawyer before signing anything regarding a non-mutually agreeable
disposition of the trust funds. ie if you are less that comfortable with what you are being asked to sign or the outcome will be anything that is less than your preferred outcome, talk to a lawyer.
As for the agents, the they only get paid if the sale closes or if their client is the party that is backing out and the other party still wants to close. So in the case above the seller's agent would not be paid but the Buyer's agent could bill the buyer for the commission that they would have earned had the buyer not breached the purchase agreement (pending any adjustments in the listing or purchase agreement, which does not happen often). REALTORS® get paid for results, unless you are using a flat fee service that is paid up front, and the only result that counts is the final sale and closing.
As a seller, if the buyer backs out, it would be nice to compensate your agent for the hard work, frustration and disappointment involved with a sale going sour. However, there is nothing in the standard forms that give the agent any claim to compensation so long as the sale does not close as a result of the other party. If both parties decide not to close and agree to a mutual release then non of the agents get paid.
