The Condominium Act requires sellers of all new commercial or residential housing to keep all deposits in trust. Sureties can only be released if a mandatory guarantee is provided to protect buyers. In addition, for private buyers, the first deposits of US$20,000 are insured by Tarion Warranty Corporation, whether or not the deposits are placed in a lawyer`s fiduciary account. The developer is not allowed to enter the market with a housing project unless it is registered with Tarion, and to do this, an agreement is made between Tarion and the lawyer who holds the deposits, known as the Deposit Trust Agreement, which requires that these deposits be held in trust and not released without Tarion`s agreement. In today`s real estate market, buyers are making great efforts to compete with real estate of which several offers seem to be the norm. A common tactic is to increase the deposit amount in order to emphasize to the seller that the buyer intends to close the transaction. However, many buyers are unaware that it can be quite difficult to recover their acomptt, even if they terminate the contract for an appropriate reason (i.e. opposition to the title that cannot or will not be resolved by the seller before conclusion). When signing sales and sales contracts, buyers should realize that, although they have a clear right to the return of their deposit if the transaction is not concluded, the application of their right may not be so simple. If signing a mutual authorization or court order seems like a fair solution to sometimes difficult problems, it leaves the seller in a position of power even if a transaction is not concluded. Consider a buyer who, in his favor, inserts a clause in the agreement in order to obtain financing within five days of the execution of the contract on terms satisfactory to the buyer (this is a frequent condition in favor of buyers); the buyer is ultimately unable to provide financing acceptable to him and informs the seller that he will not waive this condition, thus terminating the contract. Unfortunately, the buyer cannot get the deposit refunded without the seller`s agreement or a court order.
Asking a lawyer to apply for a court order if it is challenged by the seller can cost $25,000 (or more) and there is no certainty about the outcome of the dispute. The result is that the buyer tries to impose a condition to his advantage, as agreed by the seller, but is not able to do so by simple means (if the seller refuses to sign a mutual authorization, the only possibility for the buyer is to initiate legal proceedings). . . .