#GoodReads – Real Estate Deposits

#GoodReads via RECO:

“Your deposit is protected”

“When working with a registered real estate agent or brokerage, consumer deposit insurance helps protect your deposit in a real estate transaction.

The coverage is available at no cost to you. All brokers and salespersons are required by law to participate in an insurance program that includes consumer deposit insurance.

The coverage responds to events such as brokerage theft, fraud, insolvency, or misappropriation of funds, subject to the terms and conditions of the policy. While the vast majority of consumer deposits end up being used exactly as intended, problems do arise from time to time. Those occasional problems are the reason for this insurance.

What are the limits available?

The consumer deposit coverage provides up to a maximum of $200,000 per claim and up to a maximum of $4 million for all claims related to a single event (for example, insolvency of a brokerage). For events that exceed the maximum of $4 million, claims are paid out on a pro-rated basis, meaning all claimants share in the total limit of $4 million. However, the insurance policy contains clauses, which may limit the amount payable if there is a loss. There is no deductible under this coverage.

Does this coverage respond to a dispute over who the deposit should be paid to?

No. In cases of a failed transaction where the parties simply cannot agree on the disbursement of a deposit held in a real estate statutory trust account this coverage does not respond. In the case of a dispute over ownership of a deposit, a brokerage can only disburse the deposit in accordance with the terms of a mutual consent and or release form signed by both the buyer and seller or by following instructions in a court order.

Your lawyer will be able to advise you on the steps to take if there is a dispute about who is entitled to a deposit…”

To read the full article, please click here.