Deposit Top-Ups in Ontario Real Estate: When Buyers Pay More After Conditions Are Removed

Many Ontario Agreements of Purchase and Sale (APS) don't ask for the full deposit upfront. Instead, some are structured with a modest deposit due on acceptance and a second, larger payment — often called a deposit top-up — due once the buyer's conditions are satisfied or waived and the deal becomes firm. If you've seen this clause in an offer and wondered why, or you're staring down a top-up deadline right now, here's how it works and what's at stake if you miss it.

This structure isn't a legal requirement — it's a negotiated term that shows up in some agreements and not others, depending on the brokerage's standard practice, the seller's comfort level, and how competitive the offer was. Understanding the mechanics before you sign protects you from an unpleasant surprise partway through your transaction.

How a Two-Stage Deposit Structure Works

A typical two-stage structure looks like this: a smaller deposit is delivered when the offer is accepted (or shortly after), while the deal is still conditional — subject to things like financing approval, a home inspection, or a lawyer review condition. Once those conditions are satisfied or formally waived and the agreement becomes firm and binding, the buyer delivers an additional deposit specified in the agreement, generally held together with the first amount in the listing brokerage's trust account.

The logic is straightforward from the seller's side. While conditions are outstanding, the deal could still fall apart through no fault of the buyer, so the seller doesn't want the buyer's full deposit tied up — and potentially disputed — in a deal that may never close. Once the deal is firm, the seller's risk profile changes, and a larger deposit reflects the buyer's now-binding commitment.

Why Sellers (and Their Agents) Ask for This

A larger deposit at the firm stage also gives the seller more comfort taking their property off the market and turning down other interested buyers, since the buyer now has more on the line if they fail to close.

What the Top-Up Clause Should Specify

Before you agree to a two-stage deposit, read the clause carefully. A properly drafted version should set out:

• [ ] The exact additional amount, or a clear formula for calculating it
• [ ] The trigger event — waiver of conditions, or a specific calendar date
• [ ] How much time you have to deliver the funds after the trigger
• [ ] Where the funds must be delivered, including which brokerage and trust account
• [ ] What form of payment is acceptable — certified cheque, bank draft, or wire

Vague or missing details in any of these areas are worth flagging to your lawyer before you sign, not after.

What Happens If You Don't Pay the Additional Deposit

Failing to deliver a required top-up on time is generally treated as a default under the agreement, in much the same way missing the closing date would be. Depending on how the agreement is worded, this can expose a buyer to:

1. A claim that the buyer is in breach of a firm, binding contract — because by the time the top-up is due, conditions have already been satisfied or waived.
2. Seller remedies for breach, which can include retaining the deposit already paid, pursuing damages if the seller ends up reselling the property, or, in some circumstances, seeking to enforce the contract.
3. Disputes over deposit funds already held in trust, which the brokerage generally cannot release to either side without a mutual release or a court order.

None of this is automatic or guaranteed to play out the same way in every deal — it depends heavily on the exact wording of your agreement and the facts. If you're going to miss a deposit deadline, contact your lawyer immediately rather than waiting to see what happens.

Practical Tips for Buyers Facing a Top-Up Clause

• Confirm where the top-up funds are coming from well before your conditions come off — don't wait until the trigger date to start moving money.
• Ask your lawyer to review the exact clause language during your lawyer review condition, if your agreement includes one.
• Keep a record — email or text — confirming delivery of funds, in addition to any receipt from the brokerage.
• If your financing timeline is tight, flag the top-up deadline to your mortgage lender early. A delayed mortgage approval shouldn't be allowed to collide with a hard deposit deadline.

Frequently asked questions