What Happens To My Deposit If I Default On Closing in Toronto?

If you default on closing, your deposit is typically forfeited to the seller, and you may also face legal action for any additional damages.

In Toronto real estate, the deposit serves as a good-faith guarantee of your intention to complete the purchase. Failing to close can have serious consequences:

What Are the Immediate Consequences?

• Forfeiture of deposit: In most cases, buyers who default lose their deposit.
• Legal proceedings: Disputes may end up in court small claims for deposits under $ 25,000, and Superior Court for larger sums.
• Potential additional damages: Sellers can sue for costs such as mortgage payments, property taxes, legal fees, or losses if the home sells for less later.

How Can Buyers Protect Themselves?

• Do due diligence: Secure financing, review closing costs, and confirm your financial position before making an offer.
• Be prepared for costs: Remember that closing includes more than just the purchase price taxes, legal fees, and adjustments all add up.
• Work with experts: Your agent, lawyer, and mortgage advisor help ensure you’re financially and contractually ready to close.

The Fox Marin Team emphasizes the importance of thorough preparation before submitting an offer. By confirming financing, understanding obligations, and planning for all costs, so that buyers avoid last-minute surprises and can protect their deposits.

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