How Are Purchase Deposits Handled in BC
Wednesday Dec 20th, 2023
In the realm of real estate transactions in British Columbia, the process of putting forth a deposit when a buyer removes all their conditions is a standard procedure. This deposit is then placed into the buyer's brokerage trust account, where the conveyance department will later apply it to the closing lawyer or notary on completion day, ultimately using it to offset the purchase price.
Typically, the deposit amounts to 5% of the purchase price. Therefore, on closing day, the buyer must bring the remaining balance of their deposit to their closing lawyer or notary's office, regardless of whether they are putting down 10%, 15%, 20%, or paying the entire amount upfront. It's important to note that real estate agents do not have drafts payable to them or transferred to them; rather, they are deposited into the brokerage's trust account. Then, on closing day, the remaining funds are brought to the lawyer or notary's office and applied to the purchase price, whether through a mortgage or direct payment to the seller if no mortgage is required. This process always takes place at the lawyer's or notary's office, and the draft for the balance of required funds is always paid to that professional's trust account.
Understanding the intricacies of real estate transactions is essential for both buyers and sellers. By being informed about the deposit process and the role of the buyer's brokerage trust account, individuals can navigate the closing day with confidence and clarity. It's important to work closely with knowledgeable professionals, such as lawyers and notaries, who can guide you through each step of the transaction and ensure that all funds are properly handled and applied to the purchase price. This level of diligence and attention to detail is crucial for a successful and seamless real estate transaction.