Definition - What does Deposit mean?

The term "deposit," in its simplest form, refers to the placement of goods or any other asset with someone who promises to keep it, even use it and return when needed. A deposit is often used as a pledge in a contract, particularly in real estate.

Justipedia explains Deposit

In a real estate contract, a deposit serves two purposes. It acts as consideration in the deal, and it serves to bind the buyer to the contract. Although a signed real estate contract would technically be legally binding without a deposit, it may not be worthwhile for sellers to go through with suing a buyer who walks away from such a contract. The deposit makes it more difficult for a potential buyer to abandon his or her legal obligations.

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