- There's no legislated minimum or maximum deposit in Ontario — resale deposits commonly run about 5% to 10% of the purchase price, negotiated between the parties.
- Your deposit is held in trust — usually by the listing brokerage — and can't be released to either side without written consent from both parties or a court order.
- Forfeiture isn't automatic: a seller can't simply keep your deposit because a deal fell through. They need a signed mutual release or a court order.
- Pre-construction deposits carry a separate layer of protection through Tarion, up to a statutory limit that you should verify directly.
The deposit is often the first thing people fight about when an Ontario real estate deal falls apart — buyers want it back, sellers want to keep it, and the brokerage holding the money in the middle can't simply pick a side. Understanding the rules before you pay a deposit is the best way to protect yourself if things go sideways.
What a Deposit Is (and Isn't)
A deposit and a down payment are not the same thing, even though buyers often use the terms interchangeably. A deposit is the amount you pay — typically with your offer or shortly after it's accepted — to demonstrate serious intent and give the seller some security against default. Your down payment is the full amount you're putting toward the home out of pocket; the deposit forms part of it and is credited against it on closing.
Missing a deposit deadline is itself a potential breach of your Agreement of Purchase and Sale, so treat the date written into your offer as a hard one, not a target.
How Much, and When It's Due
There is no legislated minimum or maximum deposit in Ontario — the number is negotiated between buyer and seller. In practice, resale deposits commonly range from about 5% to 10% of the purchase price, with sellers in competitive markets sometimes expecting more; a higher deposit can signal financial strength in a multiple-offer situation. Pre-construction and assignment deposits work differently — builders typically set structured, non-negotiable deposit schedules that can total considerably more of the purchase price, paid in instalments over months.
Most Ontario offers structure deposit timing one of two ways: the deposit is paid with the offer itself ("herewith"), or — more commonly — within 24 hours of the seller accepting it. Any remaining balance of the deposit is typically due once conditions are waived or fulfilled.
Where the Deposit Legally Has to Go
Your deposit does not go to the seller. Ontario law requires it to be held in trust — typically by the listing brokerage, in a segregated trust account kept separate from the brokerage's own operating funds — until the deal closes or the parties otherwise agree. (Verify the current governing statute and regulator with your lawyer; Ontario's real estate regulatory framework has been updated in recent years.) In a private sale without an agent, a lawyer's trust account commonly serves the same role.
Generally, the deposit earns no interest for you while it sits in trust — on closing, you receive credit for the deposit amount itself, not for any interest it may have generated.
If the Deal Collapses: Forfeiture vs. Return
A deposit forfeiture clause — standard in nearly every Ontario Agreement of Purchase and Sale — says that if the buyer defaults, the seller is entitled to keep the deposit. That typically applies when a buyer has waived every condition and then simply doesn't close, or repudiates the agreement outright. But forfeiture isn't automatic: the brokerage holding the funds won't release them to the seller without either the buyer's written consent (usually through a signed mutual release) or a court order.
The deposit is returned to the buyer when a valid condition wasn't met and proper written notice was delivered on time, when the seller defaults (for example, by failing to deliver clear title), or when both sides simply agree to part ways and sign a mutual release. A mutual release is the fastest way to resolve a dead deal — but it typically also releases both parties from further claims arising from the transaction, so it's worth having a lawyer review one before you sign it, particularly if your actual losses might exceed the deposit amount.
When Buyer and Seller Disagree
If neither side will sign a mutual release, the brokerage holding the deposit is stuck — it can't simply pick a side. Its remedy is an interpleader application: it pays the disputed funds into the Ontario Superior Court of Justice and steps out of the fight, leaving buyer and seller to litigate against each other for the money. There's no fixed statutory deadline for how long this can take; in practice, a contested deposit can be tied up for many months, and sometimes well over a year, once legal costs on both sides are factored in.
The deposit also isn't necessarily a ceiling on what either side can recover. If a seller's actual losses — carrying costs, a lower resale price — exceed the deposit amount, the agreement's wording may allow them to sue for the difference, over and above whatever the deposit already covers.
Deposit Protection for Pre-Construction
Pre-construction purchases raise a different risk: you're handing a builder a significant deposit years before the building is finished. Ontario law requires builders to hold those deposits in trust, and Tarion Warranty Corporation provides deposit protection up to a statutory limit if the builder fails to complete, becomes insolvent, or has its registration revoked by the Home Construction Regulatory Authority (HCRA) before closing — verify the current limit directly with Tarion, since it has changed over time and depends on the date of your agreement. Deposit amounts above that limit need their own protection, such as a letter of credit or insurance bond, specified in your agreement. Our Tarion and HCRA deposit protection guide covers the claims process in full; our assignment sales pillar covers what changes if you're buying or selling a pre-construction unit before it closes.
How a Lawyer Protects Your Deposit Position
Whether you're a buyer trying to get a deposit back or a seller weighing whether to sign a release, the deposit clause in your Agreement of Purchase and Sale — and how you exit or enforce it — is not something to navigate from memory. A lawyer can confirm the deadline, the required form of notice, whether your specific facts support forfeiture or return, and whether a mutual release is actually in your interest before you sign one and give up other claims along with it.
Go Deeper
Deposits are most often at risk when a condition is waived and a deal later falls through — see our conditions, waivers & bully offers pillar for the legal-risk side of that decision. For the rest of what you'll pay on closing, see our closing costs breakdown. For the full scope of what our real estate lawyers handle, start on our real estate services page, or see our published pricing for what a purchase or sale file costs, flat and HST included.
Frequently asked questions
How much deposit do I need to buy a home in Ontario?
There is no legislated minimum or maximum deposit in Ontario — the amount is negotiated between the parties. In practice, deposits on resale homes commonly range from about 5% to 10% of the purchase price, though sellers in competitive markets may expect more. Your deposit forms part of your down payment; it isn't an amount on top of it.
Where does my deposit actually go after I pay it?
It doesn't go to the seller. In most Ontario transactions, your deposit is held in trust by the listing brokerage, in a segregated trust account separate from the brokerage's own funds, until the deal closes or both parties agree otherwise. In a private sale without an agent, a lawyer's trust account can serve the same role.
Can the seller keep my deposit if the deal falls through?
Only if you sign a mutual release agreeing to forfeit it, or if a court orders it released to them. The brokerage holding your deposit cannot hand it to the seller unilaterally just because they believe you defaulted — self-help release isn't permitted.
What happens if the buyer and seller can't agree on who gets the deposit?
The brokerage holding the funds can bring an interpleader application, paying the disputed deposit into the Ontario Superior Court of Justice and stepping out of the dispute so the buyer and seller litigate directly against each other. There's no fixed statutory deadline for this — in practice, a contested deposit can be tied up for many months, sometimes longer.
Is my deposit protected if I'm buying a pre-construction condo?
Yes, within limits. Ontario builders are required to hold pre-construction deposits in trust, and Tarion provides deposit protection up to a statutory limit if the builder fails to complete, becomes insolvent, or has its registration revoked before closing. Amounts above that limit need a separate form of protection, such as a letter of credit — check your agreement, and verify the current Tarion limit, since it has changed over time.
Does my deposit earn interest while it's held in trust?
Generally, no. Brokerage trust accounts in Ontario are not required to pay interest to clients on real estate deposits. On closing, you receive credit for the deposit amount itself, not for any interest it may have accrued.
Deposit at risk, or about to pay one?
Start a file online — or talk to a licensed Ontario lawyer before you sign a mutual release or waive a condition.