What happens if the buyer's deposit cheque bounces right before closing in Ontario?

The deposit is a fundamental term of an Agreement of Purchase and Sale, and a cheque that bounces at this stage is treated seriously because it can signal the buyer will not be able to complete the purchase at all. The seller's lawyer will typically notify the buyer's lawyer immediately and may treat the failed deposit as a significant breach, since the seller took the property off the market in reliance on a real, honoured deposit.

Depending on the timing and the specific wording of the agreement, the seller may be entitled to treat the contract as at an end and pursue remedies for the buyer's breach, including keeping any funds actually received and suing for damages if the property later sells for less. If the bounce was a genuine banking error rather than a sign the buyer cannot fund the deal, quickly replacing the deposit with certified funds and providing proof may allow the transaction to continue, but this depends entirely on the seller's willingness to accept it. Because so much turns on how quickly and credibly the problem is fixed, the buyer's lawyer should be contacted the moment a bounced cheque is discovered.