How Much Deposit Do You Need to Make an Offer in British Columbia?

Before you write an offer, one of the first questions is how much money you need to put forward. The answer is not a single fixed figure. The deposit is part of what you negotiate in the offer, and it works alongside your down payment and closing costs.

This article explains in plain words when a deposit is paid, who holds it, and how it connects to what you owe on completion in British Columbia. Your agent and lawyer or notary can help you set an amount that suits your situation.

This article covers the law of British Columbia.

What a deposit is and how much to offer

A deposit is money you put forward to show you are serious about buying. It is generally applied toward the purchase price when the sale completes, and your contract should say how. The amount is whatever you and the seller agree in the offer. No single percentage applies to every purchase, so ask your agent what is common for the type of property and market you are in, and confirm the figure in writing.

A larger deposit can make an offer look stronger, but it also puts more of your money at stake if the purchase does not go ahead. Think about what you are comfortable having tied up, and read what the contract says about it before you sign.

When the deposit is paid

BCFSA's consumer guidance says a buyer usually makes a deposit with the offer or after the offer is accepted. Some offers provide for no deposit until after subjects are removed. BCFSA guidance advises that a seller's agent should discuss the risk of not receiving a deposit at acceptance, and that the seller can counter-offer to increase the deposit or require it before subject removal.

Because the seller can counter, the deposit timing is something you can negotiate. BCFSA's offers guidance also recommends that only one offer be countered at a time. Make sure you know exactly when your deposit is due, since a late deposit can cause problems under the contract.

Who holds your deposit

The deposit is usually held in the licensee's brokerage trust account, and the brokerage holds it as stakeholder. Receiving deposit money is one of the services covered by the Real Estate Services Act, and licensees must pay money received into a trust account, with withdrawals controlled by the Act. Contravening those rules is an offence.

A practising lawyer providing real estate services in the course of their practice is exempt from licensing requirements. For new developments, developers must hold buyers' deposits in trust under the Real Estate Development Marketing Act, and BCFSA can investigate if a deposit was not held in trust as required.

• Ask who will hold your deposit and in which account.
• Pay by a traceable method and keep proof of payment.
• For a presale, confirm in writing that the developer holds the deposit in trust.

How the deposit fits with your closing costs

On completion, the deposit is generally credited toward the price, so you pay the balance rather than the full amount again. Check your contract for exactly how that credit works. Your deposit does not cover everything, though. Property transfer tax is a closing cost normally paid through your conveyancer on completion.

The general rates are 1% on the portion up to $200,000, 2% on the portion from $200,000 to $2,000,000, and 3% above $2,000,000. A further 2% applies to residential value above $3,000,000. First-time buyers may be exempt for properties registered on or after April 1, 2024 if fair market value is $835,000 or less, with a partial exemption above that and below $860,000. A newly built home may be fully exempt at $1,100,000 or less. Plan your cash for these costs as well as the deposit.

What to do next

• Decide with your agent what deposit amount you are comfortable with.
• Confirm when the deposit is due: with the offer, on acceptance, or after subjects are removed.
• Find out who will hold it and where.
• Work out your property transfer tax and whether an exemption applies.
• Set aside funds for closing costs beyond the deposit.
• Have a lawyer review the offer wording on the deposit before you sign if anything is unclear.

Frequently asked questions