Everything You Need to Know About Real Estate Deposits in Ontario

From deadlines to consequences, here’s how deposits work and how to avoid costly mistakes.

By Kristin Doucet | 7 minute read

When buying a home, a deposit is more than just a sum of money; it’s a signal of serious intent.

It tells the seller, “I’m committed to this purchase.” But in Ontario, real estate deposits come with strict deadlines, and missing one can have major consequences.

If you’re buying a home, knowing how deposits work, and when they’re due, can save you stress, money, and even your dream home. Here’s a simple breakdown of what you need to know and how to stay prepared.

When is the Deposit Due?
The Ontario Real Estate Association (OREA) Agreement of Purchase and Sale (APS) sets clear rules for deposit payments. One of the most common terms used is “Upon Acceptance, but what does that really mean?

It means the buyer must deliver the deposit within 24 hours of the seller accepting the offer. Typically, deposits are held in trust by the listing brokerage, a lawyer, or another agreed-upon party. The deposit is then credited toward the final purchase price when the deal closes.

“We see buyers struggle with deposit timing more often than people realize,” says Reuven Gorsht, CEO of Deeded, a platform that streamlines real estate transactions. “The 24-hour window seems generous until you factor in banking limitations, especially with online-only institutions that don’t offer same-day services. This is where proper preparation and understanding the process becomes critical.”

Understanding Deposit Amounts
While the timing is standardized, deposit amounts can vary significantly based on market conditions and property value. In competitive markets like Toronto, deposits typically range from 5% to 10% of the purchase price, though they can be higher in bidding wars.

The deposit amount should be substantial enough to demonstrate serious intent while remaining within the buyer’s immediately accessible funds. For a $800,000 home, this could mean having $40,000 to $80,000 readily available.

Real-Life Example: The Banking Challenge
Joanna, a first-time homebuyer, submits an offer on a condo. The seller accepts it at 5 p.m. on Monday. This means she has until 5 p.m. on Tuesday to submit her deposit. Joanna banks with an online-only institution that doesn’t offer same-day bank drafts. She scrambles to transfer funds, but the deposit doesn’t arrive in time. Now, she risks losing the deal and even facing legal consequences.

This scenario has become increasingly common as more Canadians embrace digital-only banking solutions. While these platforms often offer better interest rates and lower fees, they may lack the immediate service capabilities needed for time-sensitive real estate transactions.

“The shift to digital banking has created a new challenge in real estate transactions,” Gorsht explains. “We’ve worked with clients who went through a lot of stress simply because their online bank couldn’t process a bank draft quickly enough. This is why we always recommend having a relationship with a traditional bank specifically for real estate transactions, even if it’s not your primary banking relationship.”

What Happens If the Deposit is Late?
A late or missing deposit can lead to serious repercussions. If a buyer doesn’t deliver the deposit within the required timeframe, they are technically in breach of contract.

Here’s what could happen:

1. The Seller Can Walk Away
   The seller has the right to terminate the agreement, put the home back on the market, and accept another offer. In hot markets, this can be particularly devastating as the property may sell for more than the original offer price.

2. Legal Action Against the Buyer
   The seller can sue for damages, such as the difference between the original purchase price and a lower resale price. They can also claim other costs like additional mortgage payments, property taxes, and legal fees.

3. The Seller Can Demand the Deposit Anyway
   Even if the buyer never submitted the deposit, Ontario courts have ruled that sellers can still claim the agreed-upon deposit amount as “liquidated damages.” This means a buyer could be on the hook for the deposit sum just for breaching the agreement.

The Legal Landscape
Ontario case law has consistently supported sellers’ rights when buyers fail to meet deposit deadlines. The Court of Appeal has ruled that deposit requirements are fundamental terms of the agreement, and breach can result in immediate termination rights for the seller.

Real-Life Example: The Cost of Delay
John and Lisa agree to buy a house for $850,000 with a $40,000 deposit. The deal is accepted, but they fail to submit the deposit on time. The seller re-lists the property and later sells it for $830,000. Because of the breach, John and Lisa could be sued for the $20,000 price difference, plus any additional costs the seller incurred during the second sale.

Additional Financial Consequences
Beyond the immediate risk of losing the property or facing a lawsuit, buyers who fail to meet deposit requirements often face ripple effects. They may be responsible for paying both their own and the seller’s legal fees, lose out on other homebuying opportunities, or suffer damaged credit if a court judgment is issued against them. These consequences can also make it more difficult to secure a future mortgage. On top of the financial burden, the emotional stress of litigation and a failed purchase can weigh heavily on buyers.

Understanding Trust Account Management
When a deposit is submitted, it enters a trust account managed by the designated party (usually the listing brokerage). These funds are held securely and cannot be released without proper authorization from both parties or a court order.

Provincial Variations and Considerations
While this article focuses on Ontario regulations, it’s worth noting that other provinces have different rules:

• British Columbia: Similar 24-hour rule but different dispute resolution processes
• Alberta: More flexibility in deposit timing negotiations
• Quebec: Unique civil law requirements for deposits

Key Takeaways for Buyers and Sellers
For buyers, preparation is everything. Before submitting an offer, it is essential to make sure the deposit funds are readily available in an accessible account, ideally with a major Canadian bank that allows for quick withdrawals or bank drafts. Relying on online banks can be risky, as processing times may stretch across several days and jeopardize the deal. Smart strategies include arranging pre-approved bank drafts in advance, keeping a secondary relationship with a full-service bank even if day-to-day banking is online, confirming cut-off times for same-day processing, and having a certified cheque as a backup option.

Sellers, on the other hand, should understand that a late deposit does not automatically terminate the deal. The seller must make the decision to end the agreement. Some choose to extend the deadline or work with the buyer, while others decide to pursue legal action. A seller’s choice often depends on market conditions and the overall strength of the offer. In some cases, enforcing the strict terms of the agreement may be worthwhile; in others, accepting a short delay could be more practical. When in doubt, consulting a real estate lawyer before acting is the safest course of action.

Real estate transactions can move quickly, and deposit deadlines are one of the most important aspects to get right. By understanding the rules and preparing accordingly, buyers, sellers, and agents can avoid unnecessary stress, legal battles, and financial losses.

“At the end of the day, real estate transactions are about more than just buying and selling property; they’re about people’s dreams and financial futures,” says Gorsht. “When we can eliminate the stress and confusion around deposits and other closing requirements, we’re not just streamlining a process; we’re helping people achieve their homeownership goals with confidence and peace of mind.”