September 23rd - 2014

Gimme five: The deposit and five business days

Once an offer is accepted by both parties in a real estate deal, the buyer’s deposit must be delivered to the brokerage in accordance with the terms outlined in the Agreement of Purchase and Sale (APS).


DepositGimme five: The deposit and five business days

Once an offer is accepted by both parties in a real estate deal, the buyer’s deposit must be delivered to the brokerage in accordance with the terms outlined in the Agreement of Purchase and Sale (APS). But which brokerage? The listing brokerage or the co-operating brokerage? And when do the five days actually start?

The brokerage that is the deposit holder must place the funds into its Real Estate Trust Account (trust account) within five business days of receiving it.  

Some confusion may exist on those points, according to the Ontario Real Estate Association (OREA). The association has received several questions recently about the timing of the five business days and the question of when and where the clock starts ticking.

The five business days begin when the deposit comes into the hands of the brokerage to which the cheque is payable, OREA advises. That brokerage is required to put the funds into its trust account within five business days after receiving the deposit funds. Business days exclude Saturdays, Sundays and holidays.

Some registrants may mistakenly believe that the countdown starts when the deposit is in the hands of any brokerage, but that is not correct, says Cassandra Agnew Walker, manager, standard forms at OREA. The funds must reach a specific brokerage -- the deposit holder (the brokerage to which the cheque is payable in trust) – in order for the five-day countdown to begin, she says.

“Two brokerages are usually involved in most real estate transactions, but the act is clear that the five days begin when the funds are in the hands of the brokerage to which the cheque is payable in trust. It doesn’t mean either brokerage or any brokerage. There may be people who are still confused on this point, because the onus has shifted from the days of the old act.”

If the brokerage (deposit holder) receives the funds on a Monday, the clock starts immediately upon receipt, with the first business day in the five-day countdown being Tuesday, and that brokerage has until the following Monday (excluding weekends and holidays) to deposit the money into its trust account.  Regardless of whether the cheque is handed over to the deposit holder at 7 a.m. or 11 p.m., that date is still considered the date of receipt and the count begins the next business day. If the cheque is handed over at 11:59 p.m. on a Friday night, the next business day is the following Monday, and the funds must be deposited on or before the end of the day the next Friday. 

The issue of the five business days is addressed in the Real Estate and Business Brokers Act (REBBA 2002), in Section 17 of Regulation 567/05 - General. The act refers to the brokerage that will be holding the deposit in trust for others, typically the buyers and sellers.

The revised regulations have been in place since 2006, when REBBA 2002 began to be enforced. The new act shifted the onus of the start time on the five-day countdown to the brokerage to which the deposit is payable (held in trust with) and took that onus off the registrant who received the cheque from the buyer. The revision also increased the time frame, from “two banking days” to the current “five business days.”

If any salespeople are confused on these points, they should consult their broker of record, refer to the regulation, or call RECO or OREA for clarification, she advises. “The key thing to remember is that REALTORS® are dealing with other people’s money, regardless of the amount,” adds Agnew Walker. “Consumers rely on OREA members and the act outlines how the funds must be handled. It’s important always to follow best practices and if you’re unsure about something, to double check.”

Location is another issue that may confuse some registrants, says Agnew Walker. “While the act says ‘the money comes into a brokerage’s hands’ that does not mean that the money must be handed over inside of a brokerage office. It can be given by one sales representative to another at any location. If that’s the case, receipt of that money by a representative of the brokerage still constitutes receipt of the funds.” The clock starts ticking on the five days when the brokerage to which the cheque is payable gets the cheque in its hands, regardless of whether the sales representative receiving the cheque is physically present at the brokerage office, and regardless of whether any registrant is in the brokerage at the time, she says.

“I know that REALTORS® are busy people and the cheque is not always hand-delivered by one registrant to another inside a brokerage office,” she says. “It is still incumbent upon real estate brokers and salespeople to ensure due diligence so the deposit is handled in an appropriate, professional and timely manner.”

Every real estate transaction is unique and contains its own circumstances, says Agnew Walker, but the meaning and intent of the act are clear. For instance, she notes that if the buyer rep, Ralph, meets the listing rep, Steve, at a local park on Monday and hands the cheque over at that park, the five days still begins at the time of that handover to Steve. If Steve gets busy and doesn’t deliver the cheque to his brokerage until Tuesday, the funds must still be deposited by the following Monday.

Moreover, although the legislation talks about the money coming “into the brokerage’s hands in trust for another person” (most often that’s the deposit) no-one is required to hold it in their hands or physically touch it or in order for the five days to begin counting down, she notes. For instance, if the buyer rep, Jenny, brings a cheque to the listing brokerage on a Tuesday and leaves it with Carol, a secretary, or places the cheque into an ‘in basket’ at the reception desk, and no registrant is present, that cheque is still considered to be in the hands of the brokerage that day and must be deposited within five business days -- the following Tuesday.

Time is of the essence in real estate, and registrants are urged to get the deposit to the brokerage to which the cheque is payable as set out in the APS, Agnew Walker advises. The five business days stipulated in the regulation, only applies to the deposit holder putting the trust funds into the Real Estate Trust Account. (By contrast, buyers and their REALTORS® must be sure the deposit gets to the brokerage in a timely manner, as per the APS. Salespeople should make every effort to collect and deliver the deposit funds to the appropriate brokerage as soon as possible to avoid legal problems for the client or customer.) In turn the listing brokerage should also strive to deposit the cheque as quickly as possible into the trust account to comply with REBBA 2002, she adds.

Share this item

Quiz: Deposit and five business days Technology and strategy the focus of events

For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

416-445-9910 ext. 246