Will we need to return deposit money paid to us?

Question

** We are particularly looking for an answer from someone who knows consumer laws in Vancouver, BC Canada. However, all answers are appreciated. **

We closed our business and was looking for someone to buy the assets in the business. Before we were about to tear down the assets from a location and move them to a storage with intention to sell them later, we got a buyer who put down a 20% deposit on the assets and set a date to close the sale all written and signed. He also agreed to pay the rent of the location where the assets where located. The close date passes and the buyer still doesn't pay us for unrelated reasons. One week after the agreed close date, the buyer backs out of the deal. He requested that we pay him back the rent money and the deposit, but we refused. We feel that we held off our plans to remove the assets and sell them outside the location which caused us personal damages (ie truck, et. Do we need to pay this person back any of the money?

The buyer is saying to following to us...

As for the $4000 deposit, it was never stated or implied that it was non-refundable. If it was written then I would not have signed. A deposit is refundable unless otherwise stated. For example, if you walk into a car dealership and have to have a particular car but it is not in yet you leave a deposit. If you change you're mind by the time the car arrives, by law, the dealership must return you're deposit.

Does this make sense or hold any ground?

I just wanted to add details about the agreement made with the buyer...

We hand wrote the document at my kitchen table. It reads somewhat like the following:

The "buyer" has agreed to make a 4000 dollar deposit on the assets located at the "address" Completion of the sale of 16000 will take place on January 30, 2007. The buyer has also agreed to pay the rent of the location where the assets are located until the lease is transferred into the buyer's name.

The buyer officially backed out of the deal 2/8/2007

Answer 1

If all the buyers responsibilities, outlined within the four corners of the contract, were not fulfilled, he is owed nothing. He cannot rely on any modifications made verbally, subsequent to signing the contract. (if you said not to worry about the closing date, for instance). Deposit money (and his rent) was put down to preclude you from disposing of the property. He has to pay for that luxury.

All contracts should list reasons for forfeiture of deposits. Yours should have stipulated that failure to abide by the terms of the contract will result in forfeiture of deposit, and what constitutes a breach. If yours does say this, then he REALLY has no leg to stand on. (he doesn't, anyway).

Contract law is pretty much ubiquitous throughout the Western world. It only differs in the minutia, but yours is as simple as it gets. Your jurisdiction may limit the amount or %age that you can keep, but he certainly won't get it all back. Just tell him to sue you and let a judge decide.

Edit: First of all, this was a private sale, so the same rules don't apply (corporate vs. individual). Secondly, many jurisdictions (in the US, at least) allow car buyers to return a car within a certain time (usu. three days) and get a full refund, whether they took it home the same day or not.

It doesn't matter one whit what he says. If you want to keep the money and he wants it back, he needs to go to court. He's trying to argue the law to you like you're the judge. You don't have to decide anything (whether he's right or wrong). That's what courts are for.

Now do you see why I said that part about penalties and forfieture? Just keeps everything much cleaner.

Answer 2

A mix of ethical and legal...ethically, yes, legally - perhaps. Quantifying that last one...if there was an agreement (written) that stipulated the terms of the arrangements with the assumed purchaser, and this agreement placed in writing, that any deposit, transfer payments, rental payments pro-rated or otherwise for the assets and location, would be with held up to the amount of any expenses incurred by the seller in the event the buyer chose to waive his option to purchase, then you would follow those stipulations. Otherwise, his lawyer could walk all over this if everything was done verbally. I don't think you'd do business that way tho. So I'd have to assume that there was some form of safeguard in place for this type of event. Usually, if the withdrawal is due to unforseen problems on the buyers part, this is covered in the agreement...if it is simply a matter of the purchaser having gone elsewhere...then if drawn up correctly, you could very well be able to recover most if not all of your fees that his withdrawing caused.
Some rare times full deposits aren't returned but in the larger part the majority is returned except for an Admin fee which can be up to as much as 10% of the initial deposit.

If you really want to ensure your interests are taken care of please address this situation with your Legal Rep, he is in the best position to direct you correctly. I am speaking only from the aspect of someone who has had numerous dealings with real estate, business transactions (buy and sell) and Leaseholding properties in the Province of Ontario. Although such basic terms should be across Canada, there can be additional or lesser safeguards involved. All things pertaining to such transactions should be in writing...spelling out all terms, agreements and stipulations for events like this, if you have that review it closely and you may find your answer there.

Good luck, sorry about the problem

Added: He is speaking cars vs business here and there is a substantial difference in a car dealer with 3000 cars on the lot giving back a $500 deposit over a business where the deposit is in the thousands. The reason for that is for cases such as this...the fellow believes he can take his time, renege and demand to be fully reimbursed while you, the seller, lose to expenses incurred, lost business dealings that may have been possible where selling assets to another interested party might be concerned etc. Mind you, you'd have a much firmer ground to stand on where another purchaser have also been put on hold for this fellow.

Talk to your lawyer...stand your ground til you do, there may very well be a stipulated ruling that specifies the number of days allowed as the 'cooling off' period for business transactions. For consumer purchases under contract it is in some cases 30 days, in others it is 3 days...depends on the service under contract. Some housing purchases here are 7 days but Admin fees apply.

Answer 3

OK - yours is a very interesting question - so I'll take some very valuable time to explain the process of "banking" which is not the same as "investing". Banks are everywhere - even in India - there are banks - and they will help you accomplish your financial goals. You must appear in person at your nearest bank to open an account. Now if there are more than 4 people working there - its a legal bank. Now you step up and ask someone - How do I open an account? - immediately someone will come and sit you down at a nice desk - there will be a phone and a computer at the desk. All banks have those on their desks. When you open an account - they will ask you some questions - like your name and address and stuff like that. They will ask you what type of account you wish to open. If you want a checking account - they you say - checking account and they'll give you a checkbook to use to write checks. If its a savings account - they will give you a Passbook that will show how much you deposited into that account. Yes, you will get a receipt for any money that you use to open your account(s). If you want a ATM card for either account - they will give you one, and you will decide what your PIN (personal identification number) is - and you and only you will press the numbers on a pad (looks like a adding machine pad) do not let anyone see your numbers. Keep it an easy number for you to remember and do not write it down on the card! (What I do is take a piece of paper and write the numbers as a fictitious address - like my numbers are 12345 -- so I write down 12345 So. Ilky Street, Mumbai with a name like Maggi! So only I know what that means. For investments you will have to be more wary - and suspicious - there are many firms that say that they will make your money earn money - but its almost impossible these days to make any money on investments. Its better to save and buy land or a business for your wife or children, so you can retire sooner.

Answer 4

I would keep the deposit and let the other party sue you. Be sure to maintain a daily log and include events and any communications that you have with the other party. You may want to avoid conversations with the other party so they cannot somehow "trick" you into relieving them from their obligations. Your contract language will be the key to your success or failure. The judge will read the contract and he will need to interpret it to a "normal" and "reasonable" persons way of thinking. If you think your right and this other party has cost you time and money, that is what business contracts are all about, the judge will settle it reasonably. (Hopefully!!!)

Answer 5

You MAY need to pay the rent bit back, but definitely not the deposit. A deposit's purpose is to protect the seller against the other party failing to complete the deal. You might want to call some lawyers and ask them if you can ask a free question...they're genrally pretty good like that, believe it or not! LOL!!

Answer 6

In the US, once he defaulted on the purchase, he lost his deposit money. IOW, down here, we keep it.

Most will ask for the return of the deposit, but we don't have to return it, unless he has a contract to that effect. Just say no.

Answer 7

I personally would keep the 20% deposit since they broke the contract.

Answer 8

In the states you don't. I don't know about Vancouver BC.

Answer 9

In US, no. He defaulted