Does Your Real Estate Deposit Earn Interest in Ontario?

Your deposit can sit in a trust account for weeks or months before closing, so it's a fair question: does it earn interest, and if so, who gets it? The answer depends on the type of trust account involved and what your Agreement of Purchase and Sale says — and for most deposits, the honest answer is "not in a way you'll ever see."

Most Trust Accounts Are Pooled, Not Individual

Real estate deposits are typically held in a general, or "mixed," trust account — a pooled account that holds trust funds for many different clients and transactions at once, whether held by a brokerage or a lawyer. Because the funds are commingled with other clients' money rather than sitting in a dedicated account tied to your specific transaction, interest generally isn't tracked or credited to any individual depositor in the ordinary course.

This is a structural feature of how trust accounts work generally, not something specific to your deal — it applies the same way regardless of which brokerage or law firm is holding the funds.

When a Deposit Could Earn Traceable Interest

An interest-bearing trust account, set up specifically for a transaction, is possible in principle — but it isn't the default. If the parties want deposit interest to accrue and be tracked separately, that typically needs to be set out clearly in the Agreement of Purchase and Sale, including who is entitled to any interest earned — the buyer, the seller, or a split — and how it will be calculated and paid out. Without that kind of specific arrangement, don't expect your deposit to generate a return.

Why This Rarely Matters in Practice

Even where interest could theoretically apply, real estate deposits are typically held only for the period between acceptance and closing — often a matter of weeks to a few months on a standard resale transaction. Combined with pooled-account practice, the practical interest amount at stake on a typical residential deposit is usually modest relative to the overall transaction. Buyers and sellers are generally better served focusing negotiation energy on price, conditions, and closing terms than on deposit interest.

What to Check in Your Agreement

• [ ] Does the Agreement of Purchase and Sale say anything about deposit interest?
• [ ] If a specific interest-bearing account was requested, is that reflected in writing?
• [ ] Is it clear who would be entitled to any interest, if it were to accrue?
• [ ] Has the trust account holder — brokerage or lawyer — confirmed how the deposit is being held?

If your agreement is silent on interest, as most standard-form agreements are, that silence generally means the default pooled-account practice applies, with no interest credited to either party individually.

Why Trust Accounts Are Structured This Way

Pooled trust accounts exist primarily to protect client funds and simplify administration, not to generate returns for anyone. Real estate brokerages and law firms handle many transactions at once, often with deposits moving in and out over overlapping periods — tracking separate interest for each individual deposit would add significant administrative complexity for what's typically a modest amount of money relative to the transaction as a whole. Regulatory rules for both brokerage trust accounts, through RECO, and lawyer trust accounts, through the Law Society of Ontario, are built around safeguarding the principal amount and ensuring proper accounting, rather than around generating or distributing interest to individual depositors.

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