You may be surprised at how often our admin staff or myself as broker answers the question "My deal collapsed (insert date) when do I get my deposit back?
It's unfortunate when a deal collapses. The buyer is often upset because they really liked the house, and the seller is upset because they are for sale again and not "sold".
The many reasons for a deal collapsing:
- Financing was refused by the bank or CMHC
- The property inspection identified defects in the property such that the buyer was unwilling to proceed.
- Other miscellaneous conditions unsatisfied (well or septic reports etc...)
- Their offer was "bumped". It was subject to the sale of their home.
Basically the contract reads, if the buyer is unable to remove a condition and they have tried to satisfy the condition, they get their deposit back.
So, deal crashes Friday night, when does the buyer get their deposit?
This is what we think should be universal out there among brokerages and agents, yet we continue to get questioned on our practice and policy.
- The office requires paperwork. A verbal phone call is insufficient, the admin staff don't know you, they go by what is in the file, so there must be a paper trail. The contract is in writing, and unless otherwise written into the contract everything else must also be in writing. (non-waiver of conditions is preferred).
- The office processes the requests, and makes the trip to the bank, cuts the cheques, so they need to be informed. If the office doesn't know, guess where the deposit sits.
- The deposit must clear your bank. If you've ever deposited a cheque for a few thousand dollars from a source you normally don't receive from, doe the bank hold your money? Often the answer is yes. Similar for us. Because we receive the money in Trust, it is held to a higher standard than yours or my personal bank account. We have to know the money is there, before we can pay it out. Not just money in the account but "that" money. The time line for a cheque clearing the bank is 5 business days from deposit.
- Your bank is open Saturday and Sunday? Not really. Try posting online bill payments on a Saturday or Sunday, even those are held til when? Sorry but its not your banks hours its "All" bank hours. More specifically the one we deposit into.
So, first the office has to recieve the deposit, then it is put into the bank. Before that depsoit can be released we are required to ensure the monies are there. That process can take up to 5 business days.
How do I speed it up?
- Bank Draft
- Certified Cheque
- Cash (however most brokerages have limits on how much cash if any they will accept)
Other speedy sources of deposits are bank wires and transfers. While they can take longer for the depsoit to arrive in our account and often the bank charges a healthy premium for that service, the money is there, and we can payout much faster.
So if you ask your agent "how long til I get my deposit back?" and they answer right away or I'm not sure I'll ask.... Remember this blog