Who receives my deposit when I buy a property through power of sale in Ontario?

In a power of sale transaction, the deposit is generally directed to the mortgage lender that is conducting the sale, or held for its benefit, rather than to the defaulting homeowner - which makes sense once you remember that the lender is the party actually exercising its security and standing in the seller's position for the transaction. This is different from an ordinary purchase only in who is on the receiving end, not in how the deposit itself is handled procedurally.

The standard safeguards you would expect around a real estate deposit generally still apply: it is typically held in trust by a lawyer or brokerage pending closing, rather than paid directly and informally to the lender, and it is applied toward the purchase price at closing in the usual way. Your own lawyer can confirm exactly how the deposit is being held and released in the specific transaction you are entering.

Ask early in the process who is holding your deposit and under what terms, and make sure that arrangement is clearly set out in the purchase agreement before you send any funds.