What is the purpose of a 'purchase offer deposit' and how is it held?

• A. The deposit demonstrates seriousness; held in a trust account and applied to the purchase price on closing; forfeiture provisions if breach are governed by the agreement.
• B. The deposit is kept by the broker personally and never returned.
• C. The deposit is optional and not referenced in the agreement.
• D. The deposit is paid to the seller at closing.

Answer: (A)

The purchase offer deposit is there to show the buyer’s seriousness and to give the seller security that the buyer intends to complete the transaction. In Nova Scotia practice, these funds are held by the broker in a trust account (not by the broker personally). On closing, the deposit is credited toward the purchase price, reducing what the buyer pays at settlement. If there’s a breach of the agreement, the contract sets out what happens to the deposit, often allowing it to be forfeited to the seller or returned, depending on the terms of the agreement. This arrangement protects both sides and ties the buyer’s commitment to a tangible financial consequence.