- What happens to a purchase deposit depends mainly on the wording of your signed offer to purchase and on why the deal ended.
- A deal that ends because a condition was not met is usually treated differently from a buyer who simply fails to complete.
- A rental security deposit is a separate matter: a Saskatchewan landlord may request no more than the equivalent of one calendar month's rent at the start of a tenancy.
When a home sale collapses, the first worry is usually the deposit. Buyers want it back, and sellers want to know whether they may keep it after taking their home off the market.
The answer turns on what your contract says and why the sale ended. This article explains the questions that decide it, so you can speak to a lawyer with the right documents in hand.
This article covers the law of Saskatchewan.
Start with the offer to purchase
Your signed offer to purchase is the starting point. It normally sets out the deposit, the conditions that must be satisfied, the closing date and what happens if something goes wrong. Standard templates exist, such as one from the Law Society of Saskatchewan, and in that template each party pays their own lawyer. Your own contract may have been changed, so read what you actually signed.
Look for who holds the deposit, any deadline for removing conditions, and any wording about what happens to the deposit if the deal ends.
Conditions not met versus buyer default
These two situations are different, and the difference often decides who gets the deposit.
| Situation | What it generally means |
|---|---|
| A condition is not met | A term in the contract, such as financing or an inspection, was not satisfied. Whether the buyer gets the deposit back depends on the contract wording and whether the condition was handled properly. |
| Buyer defaults | The buyer is bound to proceed but does not complete. The seller may claim the deposit or other losses, depending on the contract and the facts. |
| Seller cannot complete | The seller does not or cannot deliver the property as agreed. The buyer may have remedies, depending on the contract. |
Notice deadlines can matter. If you are relying on a condition, keep copies of every written notice and when you sent it.
Do not confuse this with a rental security deposit
Saskatchewan has detailed rules for tenants' security deposits, but they apply to tenancies, not to buying a house. A landlord may request a security deposit of no more than the equivalent of one calendar month's rent at the start of a tenancy. A landlord who wants to keep any of that deposit must make a claim within seven business days of the tenancy ending.
If you are both buying and renting, treat the two separately.
If the sale cannot be sorted out between you
Where buyer and seller disagree about the deposit, the usual path is for lawyers to exchange letters and try to settle it. If that fails, a court proceeding may be needed. Which court and what the limits are depend on the amount and the facts, so a lawyer can confirm.
- Do not assume the deposit is yours automatically, whichever side you are on.
- Avoid signing a release or mutual cancellation until you understand what you are giving up.
- Act promptly, since deadlines in the contract may be short.
What to do next
- Gather the offer to purchase, all amendments and any condition removal or waiver forms.
- Collect emails, texts and letters between you and the other side.
- Note when each condition was due and what was done about it.
- Find out who is holding the deposit and ask them not to release it until the issue is resolved.
- Speak with a lawyer about your options before responding to a demand.
Frequently asked questions
Who holds the deposit on a home purchase?
That depends on your offer to purchase and the arrangements made for your sale. Check the contract and ask your lawyer or the person who received it.
Do I get my deposit back if my financing falls through?
It depends on whether financing was a written condition in your contract and whether you followed its terms. Show your lawyer the offer and any notices you gave.
Can a seller keep the deposit if the buyer backs out?
Not automatically. It depends on the contract wording, the reason the deal ended and the facts, so a lawyer can confirm.
Do the rental deposit rules apply to my home purchase?
No. The rules about tenants' security deposits cover tenancies, such as the limit of one calendar month's rent. A purchase deposit is governed by your contract and the law that applies to it.
Sources
- Government of Saskatchewan – Security Deposits — saskatchewan.ca
- Law Society of Saskatchewan – Offer to Purchase — lawsociety.sk.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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