Can a buyer walk away if the home inspection condition fails in Ontario?

Generally, yes, but how you do it depends on the wording of your Agreement of Purchase and Sale. A conditional offer does not bind the seller and the buyer until every condition has been fulfilled or waived. That is why a seller can keep marketing the property while conditions are outstanding.

The deadline for the inspection condition and the way to give notice are set by your agreement, so read the condition closely and follow the dates and method it sets. Treat deadlines seriously and get advice before you waive anything.

The deposit is a separate question. A deposit received by the brokerage that is to hold it must be put into its real estate trust account within five business days of receipt. When a deal fails, the brokerage should release it only under a release or direction signed by all parties to the Agreement, or under a court direction. RECO's deposit insurance does not apply where a failed deal leaves the buyer and seller unable to agree on who gets the deposit. A lawyer can review your agreement before you act.