Real Estate

Locked: Deal falls through - deposit release question

  • Last Updated:
  • Mar 30th, 2022 10:28 pm
[OP]
Newbie
Nov 25, 2021
10 posts
7 upvotes

Deal falls through - deposit release question

Looking for advice please.
If the deal falls through (buyer not at fault), but the other party wouldn’t sign a mutual release form to release the deposit (likely left the country, does not respond), what options the buyer has?
Can brokerage release it? Court? Who pays the expenses?

The deal in question is an assignment not approved by builder :(
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32 replies
Newbie
Oct 22, 2020
50 posts
30 upvotes
Talk to your agent or lawyer. They're supposed to help you out.
Deal Fanatic
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Oct 16, 2008
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Maple
Usually deposit, is holding by seller brokerage, talk to your buying agent and lawyer. .
Last edited by teoconca on Nov 27th, 2021 1:41 pm, edited 2 times in total.
I hate to speculate. I hate to forecast. I am just proactive.
[OP]
Newbie
Nov 25, 2021
10 posts
7 upvotes
He said he can not help, sends me to a litigation lawyer.
I am afraid it will take long and lots of money...
Member
Jan 16, 2021
303 posts
124 upvotes
ReGreta wrote: He said he can not help, sends me to a litigation lawyer.
I am afraid it will take long and lots of money...
You will need to elaborate on why he can't help. The money would be with broker in escrow I'd think.
[OP]
Newbie
Nov 25, 2021
10 posts
7 upvotes
SargeJ wrote: You will need to elaborate on why he can't help. The money would be with broker in escrow I'd think.
He doesn't know where the seller is, he has no legal right to release the deposit without his signature.
He suggested litigation firm. What else he can do?
And how much this litigation could cost?
Jr. Member
User avatar
Aug 11, 2019
199 posts
216 upvotes
Toronto
Mutual Release or Court Order.

Other than these two, there is extremely limited and very improbable situations where you’d receive the deposit returned to you.
Full Time Realtor
GTA & Surrounding Areas
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Oct 16, 2008
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Maple
Is there expiry date or condition on purchase agreement? If no mutual agreement, the contract expired, you should get deposit back? Where you buying agent? The job is not done yet.
I hate to speculate. I hate to forecast. I am just proactive.
[OP]
Newbie
Nov 25, 2021
10 posts
7 upvotes
...conditional upon the vendor supplying assignee a vendor's consent document, unless vendor supplies the assignee and assignor with such approval not later than 180 business days after acceptance of this agreement, this offer shall be null and void and the deposit shall be returned to assignee in full without deduction and interest, this is a true condition and include the benefit of both assignor and assignee, and can not be waived by either party.
How do you interpret this?
Deal Fanatic
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Oct 16, 2008
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Maple
ReGreta wrote: ...conditional upon the vendor supplying assignee a vendor's consent document, unless vendor supplies the assignee and assignor with such approval not later than 180 business days after acceptance of this agreement, this offer shall be null and void and the deposit shall be returned to assignee in full without deduction and interest, this is a true condition and include the benefit of both assignor and assignee, and can not be waived by either party.
How do you interpret this?
Again, this question should be asked directly to both buying and selling agents, and the lawyer for this transaction.
Last edited by teoconca on Nov 27th, 2021 1:39 pm, edited 1 time in total.
I hate to speculate. I hate to forecast. I am just proactive.
Deal Addict
Jun 7, 2017
1043 posts
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BC
teoconca wrote: Usually deposit, is holding by buyer brokerage, talk to your buying agent and lawyer. .
No. The deposit is held by the seller's brokerage.

OP, why did the deal not close?
[OP]
Newbie
Nov 25, 2021
10 posts
7 upvotes
Furcorn wrote: OP, why did the deal not close?
The deal in question is an assignment not approved by builder :(
Deal Addict
Nov 22, 2004
1533 posts
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Unfortunately OP, you'll either have to get a mutual release signed or go via court order to get the deposit back.

If you do have to go via the court order route, you can add lawyer fees on top of your deposit but that will depend on what the judge rules.

I'm not sure why the assignor would have an issue with this if the funds won't get released to him/her regardless. Maybe they're not aware? Can your agent find out from their agent what's going on?
Realtor @ Royal LePage Ignite Realty
Banned
Mar 3, 2021
707 posts
348 upvotes
Put a Lien on the house
ReGreta wrote: He doesn't know where the seller is, he has no legal right to release the deposit without his signature.
He suggested litigation firm. What else he can do?
And how much this litigation could cost?
Deal Addict
Mar 22, 2010
3261 posts
1078 upvotes
ReGreta wrote: The deal in question is an assignment not approved by builder :(
This is probably the "why" your RE lawyer doesn't want to touch it and wants to send you to a litigation lawyer and you are right it will take a long time until you get your deposit back.

First in order should be finding a litigation lawyer to proceed with a court order. Your litigation lawyer will also serve a letter to the selling agent as well to have them reach out to the seller.

Of all this, I am surprised that your buying agent all of sudden just left you in the dark. Did he go over all the risks of getting into an assignment that was not approved the builder? What is your buying agent saying in the midst of all this?
Deal Fanatic
Jul 3, 2011
6517 posts
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Thornhill
That condition is written in a way that it is entirely out of the hands of the assignor and assignee as it is entirely dependent on the actions of the initial vendor - either agreeing or not agreeing to the assignment. If the original seller agrees, they will state so in writing, if they don't agree, they may state so in writing or not even respond. If the original seller agrees then the condition is automaticall yremoved and the assignee is in a binding agreement to take it out of the assignor's hands. If they don;'t agree, the assignment Offer dies and the deposit is to be returned to the assignee.

This is presuming, OP, that you've provided all the relevant information as to the condition. And if that's the case, it's not your probem that the assignor is not reachable. The assignor seller can try to withhold your deposit from you by whatever method they can drum up including not responding or claiming you are not fulfilling the contract and suing. Neither of those assist the assignor if the condition is sound, But, as mentioned you'll have to take it to court. If the deposit is under $35,000 you can take it to small claims court in Ontario. Any more than that you will want to hire a lawyer to assist.

The funds are probably sitting in the assignor's brokerage trust account. They can't release it without either the assignor's and assignee's consent or by court order. The brokerage can request to place it in the court if the seller is unresponsive.

With that out of the way, I have to ask, who on earth drafted that clause? It should have made the distinction between seller and assignor to not be ambiguous and to give the initial seller 180 'business' days which is at least 25 weeks is ludicrous! Did youhave your own agent or did you use the assignor's and were you given the opportunity to have a lawyer review the offer?
ReGreta wrote: ...conditional upon the vendor supplying assignee a vendor's consent document, unless vendor supplies the assignee and assignor with such approval not later than 180 business days after acceptance of this agreement, this offer shall be null and void and the deposit shall be returned to assignee in full without deduction and interest, this is a true condition and include the benefit of both assignor and assignee, and can not be waived by either party.
How do you interpret this?
Newbie
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Feb 27, 2017
94 posts
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Furcorn wrote: No. The deposit is held by the seller's brokerage.

OP, why did the deal not close?
Not sure where you are getting your info from, but while technically it can be held by either seller's or buyer's brokerages or even lawyer's firm, in 99% of the cases in Greater Vancouver it's held by buyer's brokerage
Gradatim Ferociter
Deal Addict
Feb 19, 2019
1569 posts
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Stouffville ON
meetthemonster wrote: Not sure where you are getting your info from, but while technically it can be held by either seller's or buyer's brokerages or even lawyer's firm, in 99% of the cases in Greater Vancouver it's held by buyer's brokerage
In ON it is usually held by the listing brokerage.
Full Time and Full Service Realtor
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Apr 12, 2013
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Moon
180 days is absolutely insane, 10 days top if the deal is void or if the conditions are not met. Not sure why the seller would play hard ball with you too, they would have their units tied.
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[OP]
Newbie
Nov 25, 2021
10 posts
7 upvotes
If it's only matter of 180 days - willing to wait, already more than 3 months...
Not willing to pay lawyers for releasing MY MONEY, but I'm afraid I will be forced to...

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