Humber/Ontario Real Estate Course 2 Exam Practice 2025 - Free Real Estate Practice Questions and Study Guide

The correct understanding revolves around the protections available for buyers in real estate transactions, especially in situations involving brokerage insolvency.

When a buyer makes a deposit with a co-operating brokerage, and the listing brokerage becomes insolvent before closing, the buyer's rights to recover their deposit are essential. The best course of action for the buyer is to make a claim under the consumer deposit component of the RECO Insurance Program. This program is designed to safeguard consumers in situations where their deposit may be at risk due to brokerage issues, such as insolvency.

It's important to note that while errors and omissions coverage may protect against negligence or mistakes made by real estate professionals, it does not specifically cover the loss of deposits due to a brokerage’s insolvency. Similarly, the idea that buyers simply lose their deposit or have inadequate protections under RECO doesn't accurately reflect the consumer protections in place.

Ultimately, the RECO program provides buyers with a structured way to seek recovery of their funds in these unfortunate circumstances, highlighting the importance of understanding available protections when dealing in real estate transactions.