- Whether you can back out depends mainly on the agreement of purchase and sale, including its conditions and deadlines.
- A real estate agent must hold a deposit as trustee for all parties, not as agent for one side.
- A brokerage cannot simply release a disputed deposit to one side, and a dispute may end up in court on an interpleader.
The seller has accepted your offer and then doubts creep in. Maybe the inspection was worrying, the financing is uncertain, or your plans changed. You want to know if you can simply walk away.
The short answer is that it depends on what you signed. This article explains how the deposit is treated under New Brunswick's Real Estate Agents Act and what to check before you act. It is general information, not advice on your own agreement.
This article covers the law of New Brunswick.
The agreement is what counts
What you can do after an offer is accepted depends mainly on the agreement of purchase and sale, including its conditions and what it says about default. Your ability to leave without penalty depends on the terms of that document, such as conditions for financing, inspection or a well-water test, and the dates by which each must be satisfied or waived. A well-water test condition is a matter of contract, so it is there only if it was written into your offer.
If a condition is still open and the agreement allows you to end the deal because it was not satisfied, you may be able to leave under the terms. If every condition has been waived or the dates have passed, backing out may be a breach. Read the exact wording, because small differences matter.
What happens to the deposit
A real estate agent who receives a deposit must hold it as trustee for all parties according to their rights under the offer or contract, not as agent for one party. The agent must pay deposit money into the trust account without delay. A cheque received with an offer need not be deposited until the offer is accepted, and then it must be deposited without delay.
No money may be drawn from the trust account except in accordance with the terms on which it was received. That means a brokerage cannot just hand a disputed deposit to the buyer or the seller because one of them asks.
If the parties dispute the deposit, the agent may, and if necessary to resolve the dispute shall, pay the deposit into court on an interpleader. An agent may act for one party and receive the deposit for that party only if the offer or contract says so and every other party acknowledges it in writing.
Possible consequences of walking away
Ending the deal without a right to do so can raise real questions about the deposit and about anything beyond it, and the answer is not the same in every case. How this applies depends on the agreement's wording and the facts of your situation, so it is worth confirming with a lawyer. These are questions a lawyer can assess once they see the documents.
| Situation | What to check |
|---|---|
| A condition is still open | Does the agreement let you end the deal if it is not satisfied, and by what date and in what form? |
| Conditions waived or expired | Is there any clause on default, deposit or damages? |
| Seller and buyer disagree about the deposit | Who holds it, and under what terms was it received? |
| Both sides want to cancel | Is there a signed mutual release that deals with the deposit? |
Steps to take before you decide
It also helps to understand what going ahead would involve, so you can compare it fairly with walking away. Real Property Transfer Tax is 1% of the greater of the price or the assessed value of the property, and it is payable by every person who tenders a deed for registration. For example, a $300,000 price with a $250,000 assessed value gives tax on $300,000, which is $3,000. Electronic registration can generally be done only by lawyers who are subscribers with Service New Brunswick, though paper submission is allowed in limited cases, such as when a registered owner submits the instrument personally.
- Do not stop communicating. Silence can make a disagreement worse.
- Do not assume the deposit is automatically refundable or automatically lost.
- Avoid sending messages that admit you are refusing to close until you understand your position.
- Keep copies of the offer, every amendment, condition waivers and all messages.
What to do next
- Find the signed agreement and every amendment or waiver.
- List each condition, its deadline and whether it was waived.
- Note who holds the deposit and any acknowledgement signed under the agreement.
- Speak with a lawyer before you give notice or stop responding.
- If you and the seller agree to cancel, get the terms, including the deposit, in writing.
Frequently asked questions
Can I get my deposit back if I change my mind?
It depends on the agreement. The deposit is held in trust for all parties according to their rights under the offer or contract, and it can only be paid out in accordance with the terms on which it was received.
What if the seller and I disagree over the deposit?
The brokerage cannot simply release it to one side. The agent may, and if necessary shall, pay it into court on an interpleader to resolve the dispute.
When does the agent have to deposit my cheque?
A cheque received with an offer need not be deposited until the offer is accepted, and then it must be deposited without delay.
Does a well-water test let me cancel?
Only if your offer includes such a condition, since it is a matter of contract. Testing itself is recommended for bacteria twice a year and for inorganic compounds such as arsenic before drinking the water.
Sources
- Real Property Transfer Tax Act, s. 2(1.03) — laws.gnb.ca
- Real Estate Agents Act, S.N.B. 2011, c. 215, s. 21(1) — laws.gnb.ca
- Land Titles Act, ss. 3 ('subscriber'), 17.1(4) — laws.gnb.ca
- gnb.ca - Testing and maintaining safe drinking water — gnb.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a real estate question
A home purchase with us is from $1,555.35, tax included. Third-party fees are extra.