Humber/Ontario Real Estate Course 2 Exam Practice

How can a brokerage return an initial deposit to the buyer if the agreement is terminated due to unsatisfactory home inspection?

1. The buyer and seller must sign a mutual release.

2. The buyer can request the return without additional paperwork.

3. The deposit is returned automatically after a 30-day period.

4. The buyer's lawyer must submit a formal request to the brokerage.

The correct answer is: The buyer and seller must sign a mutual release.

In the scenario where an agreement is terminated due to an unsatisfactory home inspection and the buyer needs to receive their initial deposit back, the correct procedure involves both the buyer and the seller signing a mutual release. This mutual release is a formal agreement that outlines the terms for the return of the initial deposit and signifies that both parties agree to terminate the agreement in this specific situation. By having both the buyer and the seller sign the mutual release, it ensures that there is clear and documented consent from both parties regarding the return of the deposit. Option B is incorrect because returning the deposit without additional paperwork can lead to confusion or disputes between the parties in the future. Option C is incorrect because there is no automatic return of the deposit after a 30-day period in this scenario. The return of the deposit requires specific actions such as signing a mutual release. Option D is incorrect as it suggests that the buyer's lawyer needs to submit a formal request to the brokerage, which is not the standard procedure for returning an initial deposit in this situation.