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The deposit is not necessarily what you think

Posted by Bruno Biemans on 14 March 2019
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In the context of a real estate transaction, it is not uncommon, not to say usual, that a sum of money is paid by the purchaser to reassure the seller as to the seriousness of his commitment and / or its solvency.
The payment of the sum is not compulsory, but if it is realized what is the qualification that should be given: deposit or guarantee?
The deposit is a partial payment made by the buyer on the total amount of the price due for the purchase of the building … it formalizes the transaction, represents a portion of the price of the building and, unless otherwise stipulated, belongs to the seller …
We repeat, it is only the use, and not any regulation, that “wants” that a deposit is paid to the signing of the agreement to sell a building.
If the buyer changes his mind and no longer wants to make the contract, he loses his deposit, which shows that the amount paid belongs to the seller who can … dispose of it freely …
The defaulting buyer is also liable for the other party to demand forced performance of the contract or payment of damages.
How does the “guarantee” differ from the down payment?
The guarantee generally means a sum of money that is blocked as pledge.
This amount formalizes and reinforces the commitment of the buyer BUT not the transaction … accordingly, the amount paid is not, at the time of its payment, a part of the selling price and continues to belong to the buyer who however, it will only be able to recover its availability if an event and / or a condition are realized.
The mechanism of the guarantee devised in the context of real estate sales is generally combined with a suspensive condition.
The guarantee will only be converted into a deposit when the condition is lifted.
Clearly, as long as there is a suspensive condition pending (unrealized), the amount of money paid by the buyer can not, whatever the name given to him in the signed document (offer or compromise), n be considered as a GUARANTEE and not a DEPOSIT.
In any case, this sum of money must be credited to the third account of the real estate agent or Notary who will be the guarantors of the protection of both parties (sellers and buyers): the purchaser does not take the risk of seeing his money disappear unexpectedly and the seller acquires the certainty of the seriousness of the commitment of the buyer.

(source: translated from pim.be)

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