We all know that there are three possibilities for the delivery of the deposit, namely, herewith (in which case the deposit is given at the same time as the offer), upon acceptance, or as otherwise described in the agreement (which would be outlined on Schedule A). Most often the option selected is upon acceptance, and this is where the confusion arises. Consider the following scenario:
An offer presented at 3:00 pm on a Saturday afternoon is accepted, after several signbacks, by the buyer at 10:03 pm on that same Saturday evening. During the negotiations the listing agent struck out the word “negotiable cheque” in the deposit section and inserted “bank draft, certified cheque, or electronic wire transfer” and this change was initialled by both the seller and the buyer.
The question becomes when does the deposit (the draft, certified cheque, or electronic wire transfer) need to be delivered to the listing brokerage?
It would stand to reason that since the buyer cannot obtain a certified cheque or effect a wired transfer on a Sunday, the deposit needs to be delivered by Monday or Tuesday, right? One look at the Agreement of Purchase and Sale, however, tells us a different story and the moral of the story is that the answer is not open for debate, nor is it subject to interpretation.
The Agreement of Purchase and Sale says, “For the purposes of this Agreement, “Upon Acceptance” shall mean that the Buyer is required to deliver the deposit to the Deposit Holder within 24 hours of the acceptance of this Agreement.” Note that nowhere does it say “banking days” nor does it refer to any wording other than “within 24 hours of acceptance”.
Coming back to our example, then, the bank draft, certified cheque, or electronic transfer must be delivered to the listing brokerage by not later than 10:03 pm on Sunday evening. If it is not delivered by that time, your buyer is in breach of contract and may be liable to damages or may end up losing a house they really love. This, in turn, will of course affect you and your reputation.
So now the question becomes how can we appease the seller by producing a certified cheque, bank draft, or electronic transfer within the allotted time while at the same time ensuring that our buyer client is not in breach of contract? The answer is quite simple, really. We can either cross out “within 24 hours” and replace it with “48”or “72”, as the case may be, or we can change “upon acceptance” to “as otherwise described” and indicate on Schedule A when the deposit is to be delivered to the listing brokerage.
I have spoken in previous blogs about being thorough and not falling asleep at the switch. This is yet another example of how things can go downhill in a big hurry if we do not take our time, read carefully and do our utmost to protect our clients.