Humber/Ontario Real Estate Course 3 Exam Practice

What happens if the home inspection is not satisfactory and the buyer terminates the agreement?

1. The buyer and seller would have to sign a mutual release in order for the brokerage to return the initial deposit to the buyer.

2. The brokerage would not have to complete the identification verification required by FINTRAC at point of closing.

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

4. A trade record sheet would not have to be prepared, as the sale has been cancelled.

The correct answer is: The buyer and seller would have to sign a mutual release in order for the brokerage to return the initial deposit to the buyer.

If a home inspection is not satisfactory and the buyer decides to terminate the agreement, a mutual release would be necessary for the brokerage to facilitate the return of the initial deposit to the buyer. This mutual release serves as a formal agreement between the buyer and the seller that acknowledges the termination of the contract and outlines the conditions under which any deposits will be returned. This is a common practice in real estate transactions to ensure that both parties agree to the dissolution of the agreement and that the buyer receives their initial deposit back without any disputes. By requiring a mutual release, it protects the interests of both the buyer and the seller, ensuring that the brokerage can act appropriately in processing the return of funds. This process also helps to maintain a clear record of the transaction, reducing potential liabilities or misunderstandings that may arise later. The other options focus on details that are not applicable in this scenario or illustrate aspects of the transaction that do not directly address the handling of the deposit upon termination of the agreement due to an unsatisfactory home inspection.