What a deposit is for
An Ontario resale has no cooling-off period. The deposit is not a pause button. It is the buyer's security so the seller takes the house off the market.
It sits in trust until closing, then it is credited to the purchase price. It is not extra money on top of the price. It is also not the down payment.
The amount is whatever the agreement of purchase and sale says. There is no legal minimum. In a competitive Toronto offer it is often a percentage of the price. That number is a negotiating signal, not a statute.
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Deposit vs down payment
People use the two words as if they were the same. They are not.
The deposit is the money that accompanies the offer, or that the offer says you will deliver by a deadline. It shows the seller you will complete. It is held in trust. At closing it is applied to the price.
The down payment is the cash you still have to bring on closing so the mortgage can fund. If the lender needs 20 percent down and your deposit was already 5 percent of the price, you bring the rest. The deposit is part of that pile. It is not a second cheque the seller keeps as a fee.
Who holds it
On a realtor deal, the listing brokerage is usually the deposit holder. The money goes into a real estate trust account under TRESA. Do not pay the seller personally. If that person spends it, you are chasing a person, not a trust account.
On a private sale, a real estate lawyer in Toronto often holds it. Either way, the APS names the holder. Wire only to that named person, using details you confirmed on a phone number you already know. A surprising email with new wiring instructions is a scam pattern, not a closing step.
Missing the deposit does not let you walk
Buyers sometimes treat the delivery window as buyer's remorse. It is not. The consideration in a resale deal is the promise to buy and the promise to sell. The standard OREA form is also signed under seal. The deposit is not what makes the contract exist.
Many offers say the deposit is due upon acceptance, which the form treats as within 24 hours. That is a contract deadline. It is the first obligation, not a cooling-off period. There is no cooling-off on an Ontario resale.
If you do not pay it, you are in breach. The seller can keep the deal alive and demand you close, terminate and look for damages, or accept the money late. You do not get to cancel by staying silent.
When the deposit comes back
If the deal is still conditional and a condition is not fulfilled or waived the way the agreement requires, you are usually entitled to the deposit back. Financing falls through inside a proper financing condition. The inspection condition is used. The status certificate review fails. That is what the condition is for.
In practice the brokerage often wants a mutual release before the money leaves the trust account. If one side will not sign, the deposit can sit there while the parties argue. Getting the condition right in the offer is easier than fighting the release later.
When a condition precedent dies on the deadline, the deposit usually comes back under that mutual release. The clocks and notice forms for financing, inspection, status, and sale-of-property are in Ontario offer conditions.
If the seller cannot close (cannot deliver title, will not perform), the buyer should get the deposit back. The seller does not get to keep security for a deal they broke.
When the seller keeps it
Once the deal is firm and the buyer fails to close, the deposit is generally forfeited. The Ontario Court of Appeal said so in Azzarello v. Shawqi (2019). The seller does not have to prove a dollar of loss to keep it. The deposit was security for performance. The buyer did not perform.
A court can grant relief from forfeiture. That is exceptional. A buyer who simply could not raise the rest of the money, or who had a change of heart after waiving conditions, does not usually get it back because the story is sympathetic.
Damages on top of the deposit
Forfeiture and damages are not the same claim. The seller can keep the deposit without proving a loss. If the seller also sues for more (the shortfall on a resale, extra mortgage interest, extra taxes while the house sat), those extra dollars have to be proven. The deposit is credited against that proven loss. It is not a bonus stacked on the same shortfall.
If you are the seller and the buyer has blown a firm closing, do not sign a mutual release just to be polite. A release can give away the claim. If you are the buyer and you cannot close, call a real estate lawyer before the date, not after it. The rest of the file is the ordinary closing process until it isn't.
Pre-construction is a different file
A resale deposit and a builder deposit are not the same product. A new condo has a 10-day cooling-off after you receive the signed agreement, the disclosure, and the Residential Condominium Buyers' Guide. Resale does not. Builder deposits also have Tarion protection and their own interest rules. That is the pre-construction closing file, not this one.
What to put in the offer
Name the deposit holder. Name the deadline. Keep a condition if you actually need one, written the way it has to work. Do not treat the 24-hour window as an exit. Do not pay anyone who is not the named holder.
The deposit is how the deal gets serious. It is also how a blown firm closing gets expensive. Write it like it matters, because it does.
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Zachary Soccio-Marandola
Real Estate Lawyer
Direct: (647) 797-6881
Email: zachary@socciomarandola.com
Frequently Asked Questions (FAQ)
Does not paying the deposit cancel an Ontario resale deal?
No. The agreement is binding when it is accepted. The deposit is an obligation under that agreement, not what creates it. Missing the deadline is a breach. It is not a cooling-off period.
If I do not waive my conditions, do I get the deposit back?
Usually yes, if the condition was written properly and you terminate the way the agreement requires. The brokerage will often want a mutual release before it pays the trust money out. A fight can freeze the deposit even when you are entitled to it.
Can the seller sue me for more than the deposit?
Yes. If you fail to close a firm deal, the deposit is generally forfeited without proof of loss. The seller can also claim proven extra losses, such as a shortfall on resale. The deposit is credited against those proven damages. It is not a free extra on top of the same shortfall.
Is the deposit the same as my down payment?
No. The deposit is held in trust and credited to the price at closing. The down payment is the cash you still need on closing so the mortgage can fund. The deposit is part of that pile. It is not a separate fee.
Who should I pay the deposit to?
The deposit holder named in the agreement. On a realtor deal that is usually the listing brokerage's trust account. On a private sale it is often the seller's lawyer. Never pay the seller personally, and never re-wire because an email asked you to.