Marty Douglas: Offers with no deposits Advice & ColumnistsDec 4, 2014 “The thing I hate about office Christmas parties is looking for a job the next day.” – Phyllis Diller. Merry Christmas and best wishes for the season and New Year from all of us here at – oh wait, there’s just me. Perhaps I dabbled in the eggnog a tad early. Speaking of the New Year, I hope that your planning includes the best little real estate conference in North America, the Banff Western Connection, Jan. 29 – 31. Networking, technology, education combined with wonderful food in an incredible setting. And you can ski! Check out the programs and register online at banffwesternconnection. If you haven’t visited the Canadian treasure of Banff in winter, what are you waiting for? A trip you can’t write off? Now to the serious business of earning a living so you can get to Banff – writing effective offers. My family has been in the real estate business as licensees, property owners and developers for more than 50 years. My mom and dad were licensed from the late ʼ50s until, in my mom’s career, 1988. I started my career in 1970 and am still stumbling along. My sister and brother have built and owned everything from modest single-family dwellings to houseboats to waterfront acreages. My daughter, having worked for the Real Estate Council of B.C. (RECBC) as a licensing clerk, is now a seller of her third home. And this is where the column begins. Within two weeks of her listing her home she considered three offers, none of which included a deposit with the offer or upon acceptance. All contemplated a deposit upon removal of conditions. There are many excuses for this practice and most involve a lazy salesperson or a buyer who actually had or imagined a bad experience retrieving a deposit. Here’s what the RECBC has to say on the matter in its Professional Standards Manual. “(i) Need for a Deposit – Contract law does not require that there be a deposit in order to create a binding Contract of Purchase and Sale. The requirement that a contract include some form of consideration is satisfied by the mutual exchange of promises by the seller and the buyer. However, it has long been recognized that including a deposit, often an amount between five per cent and 10 per cent of the offered price, represents an expression of the serious intention of the buyer. “The Council is aware that some buyers’ agents are drafting offers that do not provide for any deposit to be paid until after subject removal. One reason stated is a concern that the seller will not authorize the release of the deposit to the buyer if the buyer does not remove the subject clauses. “Some consumers, and perhaps even some licensees, are under the misconception that a Contract of Purchase and Sale is not binding on the parties until all subjects have been removed. The obligations under a contract are created once there has been an offer and acceptance (including counter-offers, if any). Some buyers believe that not including a deposit makes it easier for them to not proceed, if they choose, with their obligations under the agreement. “Buyers’ agents need to be cautious that buyers do not assume that, by not providing an initial deposit, they have somehow diminished their responsibility to make best efforts to satisfy the terms and conditions of the contract and to remove subject clauses.” “It is the Council’s view that listing brokerages, in situations where buyers offer no deposit until removal of subject clauses, should advise sellers of the merits of a deposit being received from buyers. Increasing a deposit can be accomplished by way of a counter-offer from the seller.” The emphasis in the last paragraph is mine. By the way, I love the title of the reference, Professional Standards Manual. What that means is that if the practise or the clause or phrase you use isn’t in here, chances are you’re not a professional. These are “professional standards”. The amateur standards are found in the Coles Notes version.
Posted on: Fri, 05 Dec 2014 14:59:37 +0000
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