Is A Real Estate Deposit Refundable in Toronto?

A deposit is refundable if your offer conditions aren’t met, but once conditions are waived, the deposit is at risk if you walk away.

Deposits in Toronto are held in a brokerage trust account, and whether they’re refundable depends on the terms of your Agreement of Purchase and Sale.

When Is a Deposit Refundable?

• Conditional offers: If conditions, such as financing, inspection, or the sale of your current home, aren’t satisfied within the set timeframe, you can cancel without penalty and receive your deposit back.
• Mutual release required: Both buyer and seller must sign a Mutual Release Form before funds are released from the trust account.

When Might a Deposit Not Be Returned?

• If a seller believes the buyer didn’t act in good faith, they can refuse to sign the Mutual Release.
• In that case, the funds remain in trust until both parties agree—or a court rules on the dispute.
• Once conditions are waived or fulfilled, walking away usually means the deposit is forfeited to the seller as damages.

Why Does This Matter?

Deposits aren’t just money, they’re a show of good faith. Understanding the conditions that make them refundable protects you from surprises if things don’t go as planned.

The Fox Marin Team ensures thier clients understand exactly when deposits are safe, when they’re at risk, and how to structure conditions to protect their interests in Toronto’s competitive market.

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