Humber/Ontario Real Estate Course 2 Exam Practice

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What is correct if a buyer wants to cancel a binding agreement due to failure to obtain financing?

The buyer and seller can sign a notice of termination, enabling the brokerage to return the deposit
The buyer must sign a notice of termination for the brokerage to return the deposit
The notice of termination confirms the agreement’s end, but a mutual release is needed to return the deposit
The buyer should sign a waiver, and both parties must sign a mutual release before the deposit is returned
Neither party needs to sign any documents for the termination
A notice of waiver is sufficient to terminate the agreement and return the deposit

The correct answer is: The notice of termination confirms the agreement’s end, but a mutual release is needed to return the deposit

When a buyer wishes to cancel a binding agreement due to the failure to obtain financing, a notice of termination is required to confirm the end of the agreement. However, to return the deposit, a mutual release is needed. Therefore, the correct option states that while the notice of termination ends the agreement, a mutual release is necessary for the return of the deposit. Options A, B, D, and F are incorrect because they do not mention the requirement of a mutual release for the return of the deposit. Option E is also incorrect as it states that neither party needs to sign any documents for termination, which is not accurate in this scenario.