Can I lose my deposit if I back out of buying an Ontario property?

Yes. In Ontario, a buyer who fails to close a real estate transaction without a legitimate legal excuse — such as a properly exercised condition — can lose their deposit and may be sued for additional damages.

When you sign an agreement of purchase and sale and the deal goes firm (all conditions are satisfied or waived), you are legally bound to close. If you back out without a condition to rely on, you are in breach of contract. The vendor's typical remedy is to keep the deposit as liquidated damages and then put the property back on the market. If the vendor ultimately sells for less than your agreed price, they may also sue you for the difference.

In practice, whether a vendor pursues beyond the deposit depends on the circumstances. If the property resells quickly at the same price, the vendor's losses are limited to the deposit. If the market has fallen and the property sells for significantly less, the vendor has an incentive to sue for the shortfall as well.

The deposit is typically held in trust by the vendor's real estate brokerage (or as directed in the agreement) and is not released to the vendor automatically — it requires either mutual agreement or a court order if the parties dispute entitlement.

Conditional offers protect buyers: satisfying a financing condition requirement to use your best efforts, not gaming it to escape a deal you've changed your mind about. If you need to exit a firm deal, speak with a lawyer before doing anything.