Sprout in clear pot with money as soil Text: What you need to know... Real Estate Deposits in Toronto

What You Need To Know About Real Estate Deposits in Toronto

Tuesday Jun 20th, 2023


When making an offer on a home, the deposit is an integral part of the process. Not only does the deposit provide security to the seller, it is also a show of good faith. The deposit forms part of the agreement. The contract is firm and binding even without the deposit.

When do I pay the deposit?
In Toronto the deposit must be paid within 24 hours of the offer being accepted. If you are in a scenario where multiple offers are being made, attaching the deposit cheque to the offer could give you an edge in the negotiations. It is also important to note that if the deposit is made late it is considered a breach of the contract and could affect the sale.

How much should the deposit be?
A deposit is typically 5% of the value of the first offer on the home and is applied against the total down payment.  It is not an extra cost, the deposit is applied to the purchase price of the home.  In a competitive bidding situation a larger deposit may give you an advantage.

What form of payment should the deposit be?
A bank draft, certified cheque or money order are acceptable forms of payment. It should be made payable to the listing agency’s name. The deposit holder is identified on the first page of the Agreement of Purchase and Sale.

Where is the deposit held?
The deposit is usually held by the listing brokerage in a trust account.

What happens to the deposit if my offer isn’t accepted?
You redeposit the funds into your account.

What happens to my deposit if there is a dispute?

Although it is very rare, sometimes a dispute arises. The deposit cheque can only be released from the listing brokerage’s trust account when:

  • The deal closes

  • A court order

  • The buyer & seller mutually agree to release one another from the contract.

How deposits work in the Toronto real estate market can be confusing. If you have further questions please feel free to contact me in complete confidence.

This information should not be relied on as legal advice, financial advice, or a definitive statement of the law in any jurisdiction. For such advice, please consult your own legal counsel, financial representative, and/or insurance representative…


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