100,000+ clients have trusted Axess Law with their legal needs.

When a Deal Falls Through, Who Keeps the Deposit?

Miniature house and a stack of coins

The deposit paid by the buyer for the purchase of real estate in Ontario is only released in the event that the sale goes through, upon mutual release of the parties, court order or due to a specific term in the contract.  

Court Order

In the event that a court order is sought, the buyer will ordinarily have the deposit returned if the seller is in default or if the contract may not be completed, through no fault of the buyer or seller.   Conversely, the buyer will ordinarily forfeit the deposit if the buyer is in default. If the agreement for purchase and sale stipulates what is to happen to the deposit in certain scenarios, then the court will follow the provisions of the contract.

Mutual Release

Anything short of a court order or completion of the sale requires the mutual release of the parties in order for one of the parties to receive the deposit moneys.  If the contract is conditional upon a specific event, such as obtaining a home inspection or obtaining financing, the return of the deposit to the buyer still requires the release from the seller, even if the home inspection was not satisfactory or if financing was not obtained.  Although it is rare, the seller may nevertheless refuse to provide the go ahead to the brokerage to release the deposit to the buyer. In such an event, the parties would be forced to go to court, which at times may cost the parties the same if not more than the deposit amount. If the seller refuses to allow for the release of the deposit, your real estate lawyer may prove to be instrumental in the resolution of the matter.

Deposit Not Paid

What happened if the deposit was never paid?  Because the payment of the deposit does not go to the heart of the contract, the vendor is not entitled to back out of the contract and sell the property to another purchaser in the event of non-payment of the deposit.   It may be worthwhile to speak to your real estate agent or real estate lawyer about drafting a clause, which would make the payment of the deposit an essential term of the contract. If the clause specifically allowed for termination of the contract in the event of non-payment, the vendor would be able to sell to a third party purchaser.   

Axess Law offers topnotch real estate services in Canada. Do you want to get a quote? Click here.

Testimonials

It was a pleasure working with Patricia from Axess Law. It was my first time purchasing a home, and was very nervous about every step in the process. I called and emailed Patricia several times with the silliest questions. She answered them all promptly, and provided the best customer service I could ask for. I would recommend Axess Law and particularly Patricia to everyone.

Cindy Tran

In the past I had to make appointments and waited for days to see a lawyer. Now conveniently this office is at my neighborhood supermarket. I was able to walk in and get my documents signed in less than 30 minutes The staff are courteous and professional. I would recommend anyone. Prompt service.

Joy Stewart

I am writing this review on behalf of my daughter who completed her first Real Estate condo transaction with AxessLaw. Besides just helping my daughter as a client, they helped her understand every single step involved in the process and the whole process was completed without any problems. I would recommend them to anyone looking for hassle free real estate transaction without thinking twice.

Irene Tucker

Awards

mortgage rates startup 50 award image
title insurance w 100 award image
will and testament fp award image
notary public rising award 2016 image
realty executives canadian lawyer award
best of legal advice Innovative Lawyers Award

Get Your Quote Now!