What happens to the buyer's deposit when an Ontario home sale completes?

In Ontario, the buyer's deposit is held in trust by the listing brokerage (or, if agreed, by the seller's lawyer) from the time it is paid until closing. The deposit belongs to the buyer until closing occurs — it is not the seller's money during the conditional period or the firm waiting period.

On closing day the deposit is released from trust and applied toward the purchase price. The buyer's lawyer wires the remaining balance of the purchase price to the seller's lawyer, who combines it with the released deposit, pays out the mortgage and any other charges, deducts fees and commissions, and sends the net proceeds to the seller.

The deposit is therefore part of the overall purchase price rather than a separate bonus for the seller. Its main practical function is to show the buyer's financial commitment and to provide immediate compensation to the seller if the buyer defaults after the deal is firm. If the deal falls apart during the conditional period according to a proper condition clause, the deposit is returned to the buyer.