A New Form: Form BRB

The PAR Legal Hotline fields many questions about how brokers should deal with the return of deposits for transactions that do not close. We have published articles reviewing the steps brokers should take based on the language of PAR’s Agreements of Sale, but that still leaves one lingering question: “What form should a buyer use to request their deposit be returned by the broker?” 

To address that recurring issue, we have created a new form, the Buyer’s Request to Broker for Deposit (Form BRB). This form provides a consistent, written method for buyers to request the return of deposit funds from the broker holding them. 

When to Use Form BRB 

 Form BRB is intended for use by buyers when a broker is holding the deposit and the buyer is requesting that the money be returned under the terms of the Default, Termination and Return of Deposit paragraph (26(C) in the residential agreement but numbered slightly differently in the others). 

It applies in situations where: 

• There is no release or written agreement signed by both parties directing the broker how to release the deposit; and 
• There is no agreement or court order resolving the dispute. 
• Neither party has initiated mediation or litigation prior to the number of days stated in that paragraph 

Once the applicable timeframe has passed (180 days by default, or whatever the parties have negotiated), the buyer may submit Form BRB to formally request the return of the deposit. 

When NOT to use Form BRB 

The return of deposits language only applies where a broker is holding the deposit, so do not use this form if a third party like an attorney or title company is holding the deposit. The terms under which escrowed funds would be returned should be included in some sort of an escrow agreement with that entity. 

Form BRB is not interchangeable with Form AREL (Agreement of Sale Release and Distribution of Deposit Monies). Form BRB is just for this one, very narrow purpose: a unilateral request (which makes it a demand, really) from the buyer to the broker to return the funds when the parties haven’t been able to work out their dispute and a certain amount of time has passed. Form AREL is an attempt to negotiate a mutual agreement between the parties about how the funds will be released.  

Do not use Form AREL as the request to the broker. 

Do not use Form BRB when the seller and buyer are trying to negotiate the return of deposits. 

Do not use Form BRB for sellers who are trying to retain the deposit.  

How the Process Works 

After the applicable timeframe expires, the buyer may submit Form BRB as a written request to the broker holding the deposit. If the broker has not received verifiable written notice that the dispute is the subject of mediation or litigation, the broker then has 30 days (unless otherwise agreed) to return the deposit to the buyer. 

The form itself is straightforward and includes fields to include the timeframe, the date of termination or settlement (the earlier of which starts the counting of days) and the amount of the deposit. It also includes a spot for an address in case the broker is choosing to return the deposit by mail. This information is intended to assist the broker in processing the request efficiently. As always, the broker should independently verify all relevant information against the agreement of sale before disbursing funds. 

A Final Reminder 

The procedure outlined in Paragraph 26(C) is not new. Brokers have been returning deposits under this provision for many years. 

Form BRB does not change the process, it simply creates a consistent written mechanism for making the request.