This site uses cookies.

The types of cookies we use, and the way we use them, are explained in our Privacy Policy. By clicking "Accept" or continuing to use our site, you agree to our use of Cookies.
More information


 

Brian Madigan LL.B., Broker
BRMadigan@Rogers.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

Search in:  
    
    
       

Sort by:

20% Deposit is Good

November 5, 2018 - Updated: November 5, 2018

20% Deposit is Good
 

The Ontario Court of Appeal just had an opportunity to consider the size of a deposit in an agreement.
 

If it’s too large, it might be struck down as a “penalty” and a penalty is not allowed. There is also a discretion provided to Judges to make a decision permitting “relief from forfeiture”, so even if the deposit were not struck down as a penalty, a defaulting party might still get it back.
 

In Jensen v. Chicoine on 5 January 2018, the Court of Appeal decided that a $100,000.00 deposit on a $500,000.00 deal should be forfeited as a deposit and not returned.
 

So, that’s clearly 20%. No mention by the Court that it was close to the limit either.
 

It’s doubtful whether this was a real estate deal. That was probably unlikely.
 

The parties entered a deal. The total sum of $100,000.00 was paid over. The Trial Judge determined that this amount was to be considered a deposit. The parties didn’t use lawyers to craft the documents. When the deal “fell apart”, the parties came up with a terminating agreement. Again, they didn’t use lawyers, so it was vague. Nevertheless, the Trial Judge concluded that the $100,000.00 paid was to stay with the Seller.
 

All in all, this suggests that a deposit comprising 20% of the purchase price in a real estate transaction would not constitute as penalty as being too large, nor would the Court’s relief from forfeiture powers likely be exercised.
 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: deposit size maximum 20 not penalty ontario law
| | Share

Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

BRMadigan@Rogers.com

Powered by Lone Wolf Real Estate Technologies (CMS6)