Humber/Ontario Real Estate Course 2 Exam Practice

If a buyer terminates an agreement due to an unsatisfactory home inspection, what must be done with the initial deposit?

1. The brokerage must return the initial deposit to the buyer after a mutual release is signed by both parties.

2. The brokerage does not need to complete identification verification required by FINTRAC at point of closing.

3. Both the initial and supplementary deposits must be returned to the buyer.

4. A trade record sheet is not required because the sale has been cancelled.

The correct answer is: The brokerage must return the initial deposit to the buyer after a mutual release is signed by both parties.

When a buyer terminates an agreement due to an unsatisfactory home inspection, the initial deposit must be handled appropriately. The correct answer is A because the brokerage must return the initial deposit to the buyer, but this action can only take place after a mutual release is signed by both parties. This step ensures that both parties acknowledge the termination of the agreement and agree to the return of the deposit. Options B, C, and D are incorrect because they do not accurately reflect the standard procedure in this situation. Option B is incorrect because completion of identification verification required by FINTRAC at the point of closing is a separate legal requirement that is independent of the termination of the agreement due to a home inspection issue. Option C is incorrect because while the initial deposit is returned to the buyer, the supplementary deposit may be handled differently depending on the terms of the agreement. Option D is incorrect because despite the sale being cancelled, a trade record sheet is still required for documentation purposes.