My offer on a property was accepted with a $20,000 deposit owed on acceptance. Because I held back the deposit to make sure that the home passed an inspection, the seller terminated the agreement and might seek damages; but I still want the property. Does the seller have the right to terminate just because I didn’t pay the deposit on time?

This is a question that should be answered in consultation with both your real estate salesperson and your real estate lawyer. The deposit is an important part of the agreement of purchase and sale.

Generally speaking, the agreement would have stated when the deposit was to be delivered and to whom. In your case, it was “upon acceptance” (which means by the seller), or within a prompt time after acceptance, often 24 hours. By not providing the deposit as required, you have clearly not fulfilled one of your obligations in the agreement.

I appreciate your apprehension to provide the deposit, but in this case, you may have given the seller grounds to terminate the agreement. Having not provided the deposit “upon acceptance of the offer”, and without an agreement to alter the terms of the deposit, you may have breached the agreement. Depending on the specific details of the transaction, the seller may not only be able to terminate the agreement, they may also have grounds to seek damages from you for failing to fulfill your obligations within it.

An agreement may not be completed for a number of reasons, from the discovery of costly repairs or defects, to the inability to obtain satisfactory financing and how those get addressed will depend on whether they were conditions in the agreement. Typically, if conditions are not waived or fulfilled within the predetermined period of time, depending on the language of the condition, a buyer may be able to terminate the contract or the contract may be terminated automatically, and any deposits would be returned to the buyer. If they are not conditions, then the buyer should expect a much more challenging exit from the agreement and should be discussed with their real estate lawyer.

Every transaction is unique, which is why, it is important to work with your real estate salesperson and a real estate lawyer to determine what your obligations are with respect to an agreement, and when these obligations need to be performed. As previously mentioned, the language of the clauses in an agreement is very important – a poorly written clause can result in misunderstandings and disagreements. Having your real estate lawyer review any clauses to be included in any agreement is highly advisable and can provide you with some added peace of mind.

Brokerages, as trustees of consumer funds, have strict responsibilities when dealing with buyer deposits under REBBA: including:

    • brokerages are required to maintain a properly designated trust account at a recognized financial institution;
    • a deposit received by the brokerage that under the agreement is to hold the deposit must be deposited in that brokerage’s real estate trust account within five business days of receipt of the funds; and,
    • A brokerage may only disburse the funds held in the real estate trust account in accordance with the terms of the trust.

In closing, you mentioned that you are still interested in the property. If the property is still available, you may want to speak with your salesperson to see if it is possible to move past this misunderstanding and re-engage in negotiations with the seller.

If you have a question for Joe about the home buying or selling process, please email

Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at, follow on Twitter @RECOhelps or on YouTube at

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