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Summary: A late deposit on an Ontario home purchase is a breach of contract. The Ontario Real Estate Association (OREA) Form 100 agreement of purchase and sale (APS) usually requires delivery within 24 hours, and time is of the essence. Sellers can terminate and sue for damages; buyers' options are narrower.
What does "deposit" mean in an Ontario APS?
The deposit is the money a buyer pays into the listing brokerage's trust account to show the offer is serious. It sits separately from the down payment and is credited against the purchase price on closing if the deal goes through.
On the OREA Form 100, the deposit amount, the deposit holder, and the timing all sit on the first page of the agreement. Most agents use the "Upon Acceptance" clause, which requires the buyer to deliver the deposit within 24 hours of the seller signing back. For a closer look at how the funds eventually flow through trust accounts on closing day, see our explainer on how money is exchanged during a real estate transaction in Ontario.
When is a deposit considered late?
A deposit is late the moment the deadline in the APS passes without funds reaching the deposit holder. On the OREA Form 100, that deadline is usually 24 hours from acceptance, counted to the second. A "time is of the essence" clause makes every deadline strictly enforceable.
Two practical points to know:
The clock starts at acceptance. If the seller accepts at 9:14 p.m. on a Tuesday, the deposit must reach the deposit holder by 9:14 p.m. Wednesday.
Etransfer limits and bank cut-offs do not extend the deadline. Most Canadian banks cap etransfers at $3,000 to $10,000 per day, so larger deposits often need a certified cheque, bank draft, or wire. Plan for the limits before the offer is signed.
What are the seller's remedies if the buyer is late?
When a buyer misses the deposit deadline, the seller can usually treat the contract as at an end. In 1473587 Ontario Inc. v. Jackson, 2005 CanLII 4578 (ON SC), the buyer delivered the deposit two days after the contractual deadline and the court held the late delivery was a fundamental breach under the time-is-of-the-essence clause.
A seller in this position generally has these options:
Terminate the agreement. The seller must act quickly and clearly. Accepting a late deposit into the trust account, even briefly, can waive the breach and force the seller to close on the original terms.
Pursue the unpaid deposit as a debt. Ontario courts have held that a buyer who never delivered the deposit can still be sued for the agreed amount, because the obligation to pay the deposit is treated as a separate promise from the obligation to close.
Re-list and claim damages. If the property sells later for less than the original price, the seller can sue the original buyer for the shortfall plus carrying costs (mortgage interest, property tax, utilities, additional legal fees) for the period between the two deals.
Keep a deposit that was paid late and forfeited. Where a buyer eventually delivers the deposit but still fails to close, courts will typically allow the seller to retain it as liquidated damages, as the Court of Appeal confirmed in Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149.
Sellers should not accept a late deposit silently. If a deposit lands after the deadline and the seller wants to preserve the right to terminate, the seller's lawyer typically writes to the buyer's agent rejecting the deposit and confirming the agreement is at an end before any funds are deposited.
What are the buyer's remedies if the seller refuses a late deposit?
A buyer whose deposit is rejected has fewer routes. The starting point is that the buyer breached first, so the seller's refusal is usually lawful. The buyer's options are narrower and harder to win on.
A buyer in this position can:
Ask for the deposit back if it was never accepted. If the deposit holder is still holding the funds and both parties confirm in writing that no agreement is in force, the money is returned to the buyer.
Apply to the Superior Court of Justice for relief from forfeiture. Under section 98 of the Courts of Justice Act, the court has equitable discretion to order the return of a deposit where it would be unconscionable for the seller to keep it (for example, where the seller accepted the late deposit without objection and then changed position). The leading test asks whether the deposit is out of all proportion to the seller's damages and whether retention would be unconscionable.
Sue for return of the deposit and any consequential losses. If the buyer believes the seller's termination was wrongful, or that the seller waived the late delivery, a civil claim is the path. Outcomes depend heavily on the wording of the APS and the conduct of both sides after the deadline passed.
A buyer's strongest position is almost always preventing the lateness in the first place. Pre-arrange the wire, confirm the bank's cut-off, and have your agent confirm receipt before the deadline passes. The same goes for confirming the right deposit holder, since funds sent to the wrong party do not satisfy the APS. For context on the documents and timing that follow the deposit, see our overview of closing documents in Ontario.
How do buyer and seller remedies compare?
Buyer and seller remedies on a late deposit are not symmetrical. The seller, as the innocent party once the deadline passes, has the broader toolkit: terminate the agreement, claim or keep the deposit, and sue for the resale shortfall. The buyer's path is mostly defensive and depends on the seller's conduct after the breach.
Seller (buyer is late) | Buyer (seller refuses late deposit) | |
Right to terminate | Usually yes, if acted on promptly | No, buyer breached first |
Claim on the deposit | Can sue for unpaid deposit or keep one paid | Can ask for return only if deal is fully off |
Damages beyond the deposit | Yes (price gap on resale plus carrying costs) | Rare; available only if seller wrongfully terminated |
Risk of waiver | Accepting late funds can lock seller into closing | Limited; buyer is already in default |
Typical first step | Lawyer's letter rejecting the deposit | Lawyer's letter requesting release of funds |
Frequently asked questions
How long does a buyer have to deliver the deposit in Ontario?
Whatever the APS says. The OREA Form 100 default is "Upon Acceptance," which means within 24 hours of acceptance. Other agreements use "Herewith" (immediately with the offer) or a fixed date. Read the deposit section of the APS before signing.
What if the deposit is only a few hours late?
The seller is still entitled to treat the breach as fundamental. The leading cases involved delays of days, but the same reasoning has been applied to delays of hours. The time-is-of-the-essence clause is read strictly.
Can the buyer's agent or lawyer accept the deposit on the seller's behalf?
The deposit must reach the deposit holder named in the APS, which is almost always the listing brokerage. Funds sent to the buyer's side, the seller's lawyer, or another party do not satisfy the deposit obligation unless the APS specifically allows it.
Does the deposit have to be a certified cheque?
The APS controls. Many agreements accept a personal cheque, certified cheque, bank draft, wire transfer, or etransfer. Banks usually cap etransfers, so for deposits of $20,000 or more a wire or certified cheque is more reliable.
What happens to the deposit if the deal closes normally?
It is credited against the purchase price on closing. The deposit holder transfers it to the seller's lawyer, who applies it to the balance due.
Can a seller waive a late deposit?
Yes. A seller who accepts the funds without objection, or who continues to act as if the deal is alive, can be found to have waived the right to terminate. Sellers who want to preserve that right should respond in writing before any money changes hands.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
At Ownright, we focus entirely on Ontario residential real estate law. We help buyers and sellers with purchase closings, sales, refinancing, and status certificate reviews. You can start your closing online at /start or get in touch at /contact with any questions about a deposit issue on your file.
Legal references: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98; Vendors and Purchasers Act, R.S.O. 1990, c. V.2; Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149; 1473587 Ontario Inc. v. Jackson, 2005 CanLII 4578 (ON SC).
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
