Home Purchase Deposits in Canada: How They Work

When you make an offer on a home in Canada, you will be expected to include a deposit with your Agreement of Purchase and Sale. This deposit demonstrates your commitment to the purchase and forms part of the total purchase price.

What Is a Deposit in Canadian Real Estate?

A deposit is a good-faith payment made by the buyer when submitting an offer to purchase a property. It is typically held in trust by the listing brokerage or the seller's lawyer until the transaction closes. The deposit is not the same as a down payment—the deposit is applied toward your total down payment at closing.

How Much Deposit Should You Put Down?

In Canada, deposits typically range from 1% to 5% of the purchase price, though this varies by market and region. In competitive markets like Toronto and Vancouver, sellers may expect larger deposits to show serious intent. There is no legal minimum, but a higher deposit can make your offer more attractive.

Conditions in the Agreement of Purchase and Sale

Most offers include conditions (also called “subjects” in British Columbia) that must be satisfied before the sale becomes firm. Common conditions include satisfactory home inspection, financing approval from your lender, review of the status certificate (for condominiums), and a lawyer's review of the agreement. If a condition is not met and you exercise your right to withdraw within the specified timeframe, your deposit is returned to you.

When Can You Lose Your Deposit?

If your offer is firm (no conditions) or all conditions have been waived and you then fail to complete the purchase, the seller may be entitled to keep your deposit. The seller may also pursue additional damages if the property sells for less than your agreed-upon price.

Provincial Differences

Real estate rules vary across provinces. In Ontario the Agreement of Purchase and Sale is standardized by the Ontario Real Estate Association (OREA). In British Columbia, the Contract of Purchase and Sale has different default terms. Quebec uses a Promise to Purchase. Having a lawyer familiar with your province's rules is important.

Protect Your Deposit

Having a lawyer review your Agreement of Purchase and Sale before you sign can help protect your deposit and ensure you have proper conditions in place. Personal Legal Service Plans give you access to lawyers who can review real estate documents and answer your questions about the home buying process in your province.