Breaking Down: Buyer’s Deposits in Ontario Real Estate

By Vinay Thapliyal

By Vinay Thapliyal

Associate Lawyer

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Real Estate Deposits for Buyer Property in Ontario

Whether you are a first-time homebuyer or have previously purchased a home, it can be daunting to provide a hefty deposit when purchasing a real estate property in Ontario.

You may be wondering, why am I giving this deposit or how much money do I need to give?

As a homebuyer, you should always clear up these questions with your real estate advisors.

To get started, we have provided insights on deposits in real estate transactions. We hope you will use this information to become confident in securing your dream home!

When is a Deposit Used for Buying a Property?

The deposit is financial security given to the seller by the purchaser as a commitment to complete the real estate transaction. It is also considered as a partial payment of the total purchase price at closing. During the real estate transaction, the deposit is credited to the buyer and held for the seller in case the buyer fails to complete the transaction.

Examples of Property Deposits

The buyer enters into an agreement of purchase and sale (APS) while waiving a financial condition to secure funds. During the closing period, the buyer is unable to secure funds to close the deal. The buyer is unable to rely on a financing condition to terminate the contract. As a result of failing to complete the deal, the seller keeps the deposit for damages incurred.

Buyers vs. Sellers 

The deposit is a mechanism to satisfy the seller’s damages should the buyer default on purchasing the home. Without this warranty, the seller faces difficulty collecting damages from the buyer.

Typically, the seller desires the largest deposit to deter the buyer from failing to meet the agreement’s terms.

On the other hand, the buyer will desire the smallest deposit possible amidst fear that they will lose the deposit.

Who Keeps the Deposit?

Agreement of Purchase and Sale – OREA Form

The OREA Standard Form 100, created by the Ontario Real Estate Association (OREA), has a space on the front page of the form to insert information regarding the deposit amount and who will be the deposit holder.

Usually, where a listing broker represents the property, they are the deposit holder and place the deposit in a trust account on behalf of the buyer and the seller. If there is no listing broker, the seller’s lawyer will typically keep the deposit in a trust account.

Identifying Red Flags

Directly paying a deposit to the seller instead of a deposit holder (i.e. listing broker) can result in the risk of losing the deposit if the seller refuses to return the deposit when the deal falls through and the buyer is saved by a condition in the contract.

Furthermore, in situations where the seller is fraudulently selling the home, this can pose significant red flags for the buyer, who eventually loses the deposit and becomes duped. To avoid becoming duped, ensure that the deposit is held in a trust account instead of providing it directly to the seller.

Finally, consulting an experienced real estate lawyer and real estate representative can help you smoothly navigate through the entire real estate process.

About TR Law Firm

If you need any real estate legal consultation, TR Law Firm helps clients prepare all documents and complete necessary steps to ensure a smooth real estate experience. Please contact us to set a virtual chat with our experienced lawyers or feel free to call us at (905) 463-2088 or email at

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