The Deposit That Arrived Late
A salesperson negotiates an agreement of purchase and sale for a $640,000 resale home. The agreement requires a $25,000 deposit, payable 'upon acceptance' and held in trust by the listing brokerage. The buyer's bank draft is delayed because the buyer's funds are coming from a line of credit that requires a branch visit. The buyer's salesperson sends an email saying the draft will arrive 'by Friday.' The agreement is signed on a Tuesday. On Wednesday the seller's salesperson confirms the deal to the seller and tells the seller the deposit is 'in hand.' In fact, the deposit arrives the following Monday - six days after acceptance. In the meantime, the seller has removed the listing, cancelled an open house, and turned down a backup offer. The listing brokerage's trust account records show the deposit was received Monday and deposited Tuesday. The buyer now wants to amend the closing date, and the seller is furious.
1. What did the salesperson do wrong regarding the deposit, and what are the trust-accounting implications?
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The core error is the representation that the deposit was 'in hand' when it was not. A registrant must not make a false or misleading statement about a material fact - and the status of the deposit is material to the seller's decision to accept and to remove the listing. The salesperson should have said the deposit was promised but not yet received, and should have followed up in writing.
Trust-accounting implications: (1) The deposit must be held in the brokerage's trust account and accounted for separately; it cannot be commingled with operating funds. (2) The brokerage must record the receipt date accurately - the records show Monday receipt and Tuesday deposit, which is consistent with the actual timeline, but the salesperson's Wednesday statement conflicts with those records. (3) If the brokerage's policy or the applicable rules require deposits to be deposited within a set time (commonly the next banking day), the brokerage should confirm it met that deadline once the funds arrived. (4) The salesperson must not tell the seller the money is in trust until it actually is. The file should contain the bank draft, the deposit slip, and the trust ledger entry.
The salesperson should also consider whether the delay triggered a breach by the buyer - the agreement said 'upon acceptance,' and six days late may be a breach, depending on the wording and whether time was of the essence. The salesperson should not paper over the delay; they should disclose it to the seller and recommend legal advice.
2. The buyer wants to amend the closing date. How should the salesperson handle this given the deposit issue?
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The salesperson should first correct the record: tell the seller, in writing, that the deposit actually arrived Monday and was deposited Tuesday, and that the earlier 'in hand' statement was inaccurate. Then the salesperson can present the buyer's request to amend the closing date as a separate negotiation.
The seller is entitled to refuse or to attach conditions - for example, requiring the deposit to be topped up, requiring the buyer to pay the seller's carrying costs for the delay, or treating the late deposit as a breach. The salesperson should not pressure the seller to agree, and should not tell the buyer the seller 'will be fine with it.' The salesperson should recommend both parties get legal advice, especially because the late deposit may give the seller leverage or a claim.
If the amendment is agreed, it should be in writing and signed by both parties, and the salesperson should confirm the deposit is properly held before closing. The salesperson should also review whether the buyer's financing commitment is still valid for the new date - a closing-date amendment can invalidate a rate hold or a financing condition. Document all communications.
3. What should the brokerage do to prevent this in future listings?
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The brokerage should adopt and enforce a deposit-handling protocol: (1) a deposit is 'received' only when funds are actually in the brokerage's possession - a promise, email, or bank draft in transit is not receipt; (2) the listing salesperson must confirm receipt with the brokerage's accounting team before telling the seller the deposit is in hand; (3) the brokerage should have a written checklist for offer acceptance that includes deposit verification, trust-ledger entry, and a receipt date; (4) the salesperson should communicate deposit status to the seller accurately and in writing, including any delay; and (5) the brokerage should train registrants on trust-accounting rules and on the consequences of misstating deposit status.
The brokerage should also review its trust reconciliation to confirm the deposit was recorded on the correct date and that the ledger matches the bank statement. If the brokerage's records show a discrepancy between the salesperson's statement and the ledger, that should be investigated and corrected. The goal is a paper trail that matches reality, because a misstatement about trust funds is a serious regulatory matter.