Do you have to provide a deposit in a real estate transaction?
The answer is no. A deposit is not a mandatory aspect of a real estate contract in British Columbia. The standard real estate contract is made under seal and contains a clause that the contract is irrevocable, this eliminates the need for consideration. Typically a contract in law must have consideration to be firm and binding, that could be money, wine, a car etc. In Vancouver real estate realtors would recommend receiving 5-10% of the purchase price in a bank draft to form the deposit. The deposit is held in a trust account and forms part of the purchase price. While it would be incredibly foolish to accept an offer with no deposit, it would be a legal contract based on the wording in the standard contract of purchase and sale provided by the real estate council of British Columbia.
(11) Contracts under Seal
The latest edition of the Contract of Purchase and Sale developed by the B.C. Real Estate Association and the Canadian Bar Association (B.C. Branch) contains a clause which provides that the acceptance of the seller is irrevocable until the terms and conditions are waived or declared fulfilled or any options are exercised. The provision also provides that the Contract of Purchase and Sale is executed under seal. Clause 21 of the standard Contract of Purchase and Sale provides:
Acceptance Irrevocable (Buyer and Seller)
The Seller and the Buyer specifically confirm that this Contract of Purchase and Sale is executed under seal. It is agreed and understood that the Seller’s acceptance is irrevocable, including without limitation, during the period prior to the date specified for the Buyer to either:
(a) fulfill or waive the terms and conditions herein contained; and/or (b) exercise any option(s) herein contained.
As a result of this clause, once the seller accepts the contract, the seller cannot argue that the conditions imposed by the buyer were too subjective or uncertain to be enforceable. In other words, the acceptance of the seller is irrevocable. Additionally, because the clause provides that the Contract is executed under seal, no additional consideration is required to be paid by the buyer to the seller.
Simon Clayton – @604Realtor 604-764-0711 Macdonald Realty Vancouver 2105 W 38th Avenue.