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Summary: A real estate deposit is a good-faith payment, usually around 5% of the purchase price, that a buyer delivers within 24 hours of an accepted offer. It is held in the listing brokerage's trust account under Ontario's Trust in Real Estate Services Act (TRESA) and credited toward the purchase price at closing.
What is a real estate deposit?
A deposit is the money a buyer pays after a seller accepts their offer, to show the commitment is serious. It is not an extra cost. It counts toward your down payment and is credited against the purchase price when the deal closes.
The deposit sits separately from the rest of your funds from the moment you pay it. It does not go to the seller, and it does not go to your own lawyer at first. It goes into the listing brokerage's trust account and stays there until closing, when it is applied to what you owe. The OREA (Ontario Real Estate Association) standard Agreement of Purchase and Sale (APS) sets out the amount, the deposit holder, and the timing on its first page. Our guide on what you should know about the Agreement of Purchase and Sale walks through how those terms fit together.
How much is a deposit, and when is it due?
A deposit in Ontario is usually about 5% of the purchase price, though buyers competing in a multiple-offer situation in Toronto or the GTA often offer more to strengthen their bid. The APS controls the exact figure and the deadline.
Timing is the part first-time buyers most often underestimate. The OREA Form 100 default is "upon acceptance," which means the funds must reach the deposit holder within 24 hours of the seller signing back. A few key points:
Amount. Around 5% of the purchase price is typical; a competitive offer may go higher. The number is whatever the APS states.
Deadline. Usually 24 hours from acceptance, counted strictly. A "time is of the essence" clause makes that deadline enforceable to the minute.
Form of payment. Certified funds only, in practice: a certified cheque, bank draft, or wire transfer. Personal cheques are generally not accepted because they cannot be verified immediately, and e-transfer limits at most banks are too low for a full deposit.
Because the clock starts the moment the offer is accepted, arrange the funds before you submit your offer, not after.
Where does your deposit go, and how is it protected?
Your deposit is held in trust by the seller's brokerage, in an account kept entirely separate from the brokerage's own operating money. Ontario regulates these trust accounts, so the money is not the brokerage's to spend.
Trust accounts are governed by the Trust in Real Estate Services Act (TRESA) and overseen by the Real Estate Council of Ontario (RECO). RECO also administers a consumer deposit insurance program that protects deposits held in brokerage trust accounts, up to $200,000 per claim, against rare events like fraud, insolvency, or misappropriation, with no application required from you. Here is how the money moves:
Your offer is accepted. The APS names the deposit amount, the deposit holder (almost always the listing brokerage), and the deadline.
You deliver the deposit. Within about 24 hours, by certified cheque, bank draft, or wire, to the deposit holder named in the APS.
The brokerage holds it in trust. The funds stay in the trust account, untouched, for the life of the deal.
Closing day. The deposit is credited toward the purchase price, and your lawyer settles the remaining balance with your lender's funds and your own contribution.
For a fuller picture of how funds flow at the end of a deal, see how money is exchanged during a real estate transaction.
Deposit vs. down payment: what is the difference?
People use these terms interchangeably, but in Ontario they are distinct. The deposit is an early good-faith payment held in trust; the down payment is your total equity contribution, finalized at closing. The deposit forms part of the down payment, not an addition to it.
Deposit | Down payment | |
When it is paid | Within ~24 hours of offer acceptance | On closing day |
Who holds it | Listing brokerage's trust account | Settled through your lawyer |
Typical amount | ~5% of purchase price (more in competitive markets) | Your lender's required minimum, often 5%–20% |
Purpose | Good-faith commitment to the seller | Your equity contribution to the price |
Credited to the purchase price | Yes | Yes |
For a $700,000 home with 10% down, you need $70,000 of your own money. If you paid a 5% deposit ($35,000) when your offer was accepted, you bring the remaining $35,000 (plus closing costs) on closing day, not another $70,000.
What happens to your deposit if the deal falls through?
Whether you get your deposit back depends on why the deal ended. If a condition in your offer was not met, the deposit is returned. If you walk away from a firm deal, you are in breach and the deposit is usually forfeited.
A condition is not satisfied. If your offer included a condition, such as financing or a home inspection, and it is not met within the set timeframe, you can walk away and the deposit is refunded in full. This is why keeping conditions in your offer matters, especially for a first purchase.
You back out of a firm deal. With no outstanding conditions, failing to close is a breach of contract. Ontario courts have consistently allowed the seller to keep the deposit, even where the seller resells without any loss, as the Court of Appeal confirmed in Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149.
A narrow exception. A buyer can ask a court for relief from forfeiture under section 98 of the Courts of Justice Act, but only where keeping the deposit would be unconscionable or the amount is out of all proportion to the seller's loss. The threshold is high and success is uncommon.
A late deposit is its own situation with its own remedies for both sides, separate from a deal that simply falls through. The practical rule for buyers is the same either way: do not waive your conditions unless you are certain you can close.
How your real estate lawyer fits in
Your lawyer does not usually hold the deposit, since that is the brokerage's role. Your lawyer's job is at closing: confirming the deposit held in trust is correctly credited to the purchase price and coordinating the remaining funds from you and your lender.
A lawyer also reviews the APS before you are bound by it, so the deposit amount, the deadline, and your conditions are ones you can actually meet. Getting that review before you sign is the cheapest insurance against a deposit problem later.
Frequently asked questions
Is a real estate deposit refundable in Ontario?
It depends on the agreement. If a condition in your offer is not satisfied within its deadline, the deposit is returned. If you fail to close a firm deal with no conditions, the deposit is generally forfeited to the seller.
Can I pay my deposit by e-transfer?
Usually not for the full amount. Most banks cap e-transfers well below a typical deposit, so a certified cheque, bank draft, or wire transfer is normally required. Always confirm the accepted method and the deposit holder before the deadline.
Who holds my deposit?
The listing brokerage named in the Agreement of Purchase and Sale holds it in its trust account, separate from its operating funds. Money sent to the wrong party does not satisfy the deposit obligation.
Does the deposit count toward my down payment?
Yes. The deposit is part of your down payment, not an extra cost. It is credited against the purchase price at closing, so you bring only the remaining balance on closing day.
How much should my deposit be?
Around 5% of the purchase price is typical in Ontario, with higher amounts common in competitive markets. The exact figure is whatever you and the seller agree to in the APS.
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, combining a digital platform that tracks every milestone with an in-house legal team you can reach by chat, email, or video call. You can start your closing online or get in touch with any questions about a deposit on your file.
Legal references: Trust in Real Estate Services Act, 2002, S.O. 2002, c. 30, Sch. C; Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98; Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149.
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.
