Humber/Ontario Real Estate Course 2 Exam Practice

What is correct regarding deposits for an agreement of purchase and sale?

1. The initial deposit is indicated on Schedule A of the agreement of purchase and sale.

2. A supplementary deposit does not affect the balance due on closing.

3. A supplementary deposit can be conditional on a term in the agreement of purchase and sale being met or waived.

4. An agreement can contain up to two deposits, the initial deposit and one supplementary deposit.

5. All deposits must be made in certified funds or bank drafts.

6. Deposits are only necessary if the purchase price exceeds $500,000.

The correct answer is: A supplementary deposit can be conditional on a term in the agreement of purchase and sale being met or waived.

In an agreement of purchase and sale, deposits play a crucial role in demonstrating the buyer's serious intent to proceed with the transaction. The correct statement here is "A supplementary deposit can be conditional on a term in the agreement of purchase and sale being met or waived." This statement is accurate because a supplementary deposit can indeed have specific conditions attached to it, as outlined in the agreement of purchase and sale. This flexibility allows parties to tailor the deposit arrangements based on the particular terms of the agreement. The other options are not correct for the following reasons: - Option A is incorrect because the initial deposit amount is typically not specified on Schedule A of the agreement. The deposit details are usually stipulated within the body of the agreement itself. - Option B is incorrect as a supplementary deposit may impact the total balance due on closing based on the terms agreed upon by the parties. - Option D is incorrect because an agreement can actually contain multiple deposits beyond just the initial deposit and one supplementary deposit, depending on the negotiations between the parties. - Option E is incorrect as while it is common for deposits to be made in certified funds or bank drafts, it is not a strict requirement under all circumstances. - Option F is incorrect as the need for deposits in an agreement of purchase and sale is not solely determined by the purchase price exceeding $500,000; rather, deposits serve as good faith funds regardless of the purchase price.