In open contract, the deposit paid as exchange to the seller’s attorney is held as agent for the seller. Accordingly, once the exchange has taken place, the seller’s attorney is at liberty to release the deposit to the seller. This might however cause problem for the purchaser in case the seller defaults because he might have practical difficulty in getting back his money. The purchaser’s attorney should not agree to the deposit unless and until he is told of the risk beforehand. It is safer for the purchaser if he pays the money to the attorney for the seller as a stakeholder. In such a case, the attorney becomes the custodian of the deposit for both the parties. The deposit, in this case is not given to the seller until completion and if the purchaser withdraws from the contract due to the seller’s default, the deposit is returned to the purchaser along with interest.
