1. What is Short Rate Cancellation?

Short rate cancellation in Ontario real estate refers to the calculation used when a buyer backs out of a real estate transaction and the seller keeps a portion of the deposit based on a predetermined short rate percentage.

2. How Does the Calculator Work?

The calculator uses the short rate formula:

Where:

• \( Deposit \) — The initial deposit amount in dollars
• \( Real\_Estate\_Short\_Rate \) — The short rate percentage expressed as a fraction (e.g., 0.1 for 10%)

Explanation: The formula calculates the refund amount by subtracting the short rate portion from the original deposit.

3. Importance of Short Rate Calculation

Details: Accurate short rate calculation is crucial for determining fair compensation when real estate transactions are cancelled, protecting both buyers and sellers in Ontario's real estate market.

4. Using the Calculator

Tips: Enter the deposit amount in dollars and the short rate as a fraction (e.g., 0.15 for 15%). Both values must be valid (deposit > 0, short rate between 0-1).

5. Frequently Asked Questions (FAQ)

Q1: What is a typical short rate in Ontario real estate?
A: Short rates typically range from 10% to 25% of the deposit, depending on the agreement and how far along the transaction was.

Q2: Is the short rate negotiable?
A: Yes, the short rate is often negotiable between parties and may be specified in the purchase agreement.

Q3: When does short rate cancellation apply?
A: It applies when a buyer fails to complete a real estate purchase without legal justification, after all conditions have been waived.

Q4: Are there legal limits to short rates in Ontario?
A: While there's no fixed legal limit, courts may review short rates for reasonableness if disputed.

Q5: Can the full deposit be kept as a short rate?
A: Generally no - the seller must demonstrate actual damages, though in some cases the full deposit might be forfeited.