What is it?
A deposit is money the buyer pays up front to show they will keep the deal. You pay it after your offer is accepted, by the deadline written in the offer.
The money does not disappear. On closing (the day you pay the rest and the home becomes yours), the deposit counts toward the price. For example, if the price is $900,000 and the deposit was $45,000, you only need to bring the other $855,000 on closing.
How is it different from a down payment?
Both are your own money, but they are paid at different times and do different jobs.
| Deposit | Down payment | |
|---|---|---|
| When you pay | Right after the offer is accepted | On closing |
| What it does | Shows you will keep the deal | The part of the price you pay without a loan |
| How much | Often around 5% of the price (negotiable) | At least 5% to 20%, depending on the price |
| How they relate | Counts as part of the down payment | All of your own money, including the deposit |
The deposit is part of the down payment, not an extra payment.
How much do you pay?
No law sets the amount. In Toronto and the GTA, about 5% of the price is common, and in a competitive sale a bigger deposit can make an offer stand out. The amount is one of the terms in your offer, so it can be negotiated.
You usually pay by bank draft or wire transfer. You may need a large sum on short notice, so tell your bank before you write the offer.
When is it due?
The offer says how the deposit is paid: with the offer ("herewith"), after acceptance ("upon acceptance"), or on a date you set.
In the standard Ontario contract (OREA Form 100), "upon acceptance" usually means you pay within a short time after the offer is accepted (often 24 hours). Check the exact deadline, and whether weekends and holidays count, in the contract you sign.
If you miss the deadline, the seller can claim you broke the contract. If that deadline is hard for you to meet, negotiate a longer one in the offer.
Who holds the money?
Usually the listing brokerage (the seller’s brokerage) receives it and puts it in a trust account. Trust money cannot be mixed with the company’s own money and can only be paid out as the contract says. The law (TRESA) requires this.
The brokerage must put the money into its trust account within five business days. Unless the contract says otherwise, interest on trust money belongs to the owner of the money. The brokerage must tell you in writing whether the money is in an interest-bearing account and what interest rate it gets (TRESA s. 27 (2)). Check that notice and your agreement.
Your offer can also name a lawyer’s trust account as the deposit holder instead of the brokerage.
What happens to the deposit if the deal falls through?
- If a conditional offer ends because a condition (financing, home inspection, and so on) is not met within its deadline: the deposit is normally returned in full. Check that your condition clause says so.
- If the deal is firm and the buyer simply changes their mind and does not close: the buyer can lose the deposit, and the seller may also claim extra losses (for example, a lower resale price).
- If the seller cannot close: the buyer gets the deposit back and may claim losses.
- If the two sides disagree about who gets it: the brokerage can only release the money with a mutual release signed by both buyer and seller, or a court order. This is RECO’s guidance, and you will need a lawyer.
What if the brokerage loses the money?
Every registered agent and brokerage in Ontario must carry consumer deposit insurance. If the brokerage steals, misuses or loses the money, or becomes insolvent, the insurance pays up to $200,000 per claim. The buyer pays nothing for this coverage.
The insurance does not cover a dispute about who is entitled to the deposit.
Pre-construction is different
When you buy a new condo from a builder, you pay the deposit in several instalments, and the money must be held in trust by the builder’s lawyer or an approved trustee (Condominium Act, section 81). If the project is cancelled, you must get the money back with interest, and if you do not, you can claim up to $20,000 from Tarion.
See "Pre-construction deposit structure" and "Tarion" for the details.
Example
You offer $700,000 for a North York condo with a 5% deposit ($35,000). The offer is accepted on Tuesday at 3 p.m. Under the "upon acceptance" clause you hand a bank draft to the listing brokerage before 3 p.m. on Wednesday.
The brokerage puts it in its trust account. On closing day 60 days later, your lawyer’s statement of adjustments shows $700,000 minus the $35,000 deposit, so $665,000 is the "balance due on closing". Of that, $105,000 is the rest of your 20% down payment and $560,000 comes from your mortgage.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
Every brokerage shall, … (b) deposit into the account all money that comes into the brokerage’s hands in trust for other persons in connection with the brokerage’s business; (c) at all times keep the money separate and apart from money belonging to the brokerage; and (d) disburse the money only in accordance with the terms of the trust.In plain wordsA brokerage must put client money in a separate trust account, keep it apart from its own money, and pay it out only as the contract says.
Source: ontario.ca/laws/statute/02r30 · checked Oct 30, 2026
Unless otherwise provided by contract, all interest on the trust money referred to in subsection (1) shall be paid to the beneficial owner of the trust money.In plain wordsUnless the contract says otherwise, interest earned on trust money goes to the person who owns the money (usually the buyer who paid the deposit).
Source: ontario.ca/laws/statute/02r30 · checked Oct 30, 2026
If an amount of money comes into a brokerage’s hands in trust for another person in connection with the brokerage’s business, the brokerage shall deposit the amount in the trust account maintained under section 27 of the Act within five business days.In plain wordsWhen a brokerage receives trust money such as a deposit, it must put it into the trust account within five business days.
Source: ontario.ca/laws/regulation/050567 · checked Oct 30, 2026
The consumer deposit coverage provides up to a maximum of $200,000 per claim and up to a maximum of $4 million for all claims related to a single event (for example, insolvency of a brokerage).In plain wordsIf a deposit is lost through brokerage fraud, theft or insolvency, RECO’s insurance pays up to $200,000 per claim, with a $4,000,000 limit for one event such as a brokerage going bankrupt.
Source: reco.on.ca/consumers/consumer-deposit-insurance/ · checked Oct 30, 2026
In the case of a dispute over ownership of a deposit, a brokerage can only disburse the deposit in accordance with the terms of a mutual consent and or release form signed by both the buyer and seller or by following instructions in a court order.In plain wordsIf a deal fails and the two sides argue about the deposit, the brokerage cannot release it without a release signed by both sides or a court order.
Source: reco.on.ca/consumers/consumer-deposit-insurance/ · checked Oct 30, 2026
A declarant shall ensure that a trustee of a prescribed class or the declarant’s solicitor receives and holds in trust all money, together with interest earned on it, as soon as a person makes a payment, … (b) on account of an agreement of purchase and sale of a proposed unit;In plain wordsA condo developer (the declarant) must have a lawyer or approved trustee hold every buyer payment, plus interest, in trust.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
Common questions
Do I have to pay 5%?
No. No law sets a percentage. About 5% is just common, and the amount you write in the offer can be negotiated. A very small deposit can make your offer look weak to the seller.
Can I pay the deposit by credit card or cash?
Normally you pay by bank draft or wire transfer. Cash is a bad idea: anti-money-laundering rules mean brokerages may refuse it or must report it. Confirm the payment method with the listing brokerage before you write the offer.
If my financing falls through, do I get the deposit back?
If your offer has a financing condition and the deal ends because the condition is not met within its deadline, you normally get the full deposit back. If you signed a firm deal with no conditions, you may not.
Does the deposit earn interest?
The law says interest goes to the owner of the money unless the contract says otherwise. The brokerage must tell you in writing whether the account pays interest, so check that notice. If you want interest, negotiate a term in the offer to keep the deposit in an interest-bearing account.
What happens to the deposit on closing?
Your lawyer’s statement of adjustments subtracts the deposit from the price to get the balance due on closing. The deposit is part of the price you have already paid, not a second payment.
Guides that use this term
Sources checked
- Trust in Real Estate Services Act, 2002 (e-Laws) · checked Oct 30, 2026
- O. Reg. 567/05: General (TRESA regulation) · checked Oct 30, 2026
- RECO, Consumer deposit insurance · checked Oct 30, 2026
- Condominium Act, 1998, s. 81 (e-Laws) · checked Oct 30, 2026
- Condominium Authority of Ontario, Residential Condominium Buyers’ Guide (2025), 3.4 Deposits and Cancellations · checked Oct 30, 2026
- Tarion, Coverage & claims before you move in (deposit protection) · checked Oct 30, 2026
- CMHC, Requirements for mortgage loan insurance (minimum down payment) · checked Oct 30, 2026