by 
This guide explains what a deposit is, why it matters, how much you can expect to pay, and the rules that govern it across Canada.
Defining a Real Estate Deposit
A real estate deposit is a good-faith payment made by the buyer to show they are serious about purchasing the property. It is not an extra fee because it becomes part of the buyer’s down payment and is credited toward the total purchase price on closing.
The deposit must be delivered once an Agreement of Purchase and Sale (APS) has been accepted, or in some provinces, delivered along with the offer/promise to purchase.
The exact timing is typically outlined in the contract and depends on provincial practice (often within 24 hours of acceptance in competitive markets).
Purpose of a Deposit
The deposit serves several key functions:
- Demonstrates commitment: It reassures the seller that the buyer intends to move forward with the purchase.
- Protects the seller: If the buyer backs out after removing conditions, the seller may be entitled to keep the deposit.
- Secures the agreement: It formalizes the offer and signals the seriousness of negotiations.
- Forms part of the purchase funds: At closing, the deposit reduces the remaining amount the buyer must bring in the form of a down payment or mortgage financing.
Where the Deposit Is Held
Deposits are not given directly to the seller. Instead, they must be held in trust:
- Usually by the listing brokerage, in a regulated trust account.
- In some cases, by a lawyer or notary, depending on the province.
- These accounts are tightly monitored by real estate regulators to protect consumer funds.
Before you finalize funds in trust, estimate land transfer tax, legal fees, and prepaid adjustments with our closing cost calculator.
How to Pay Your Deposit (Accepted Formats in Canada)
Across Canada, deposits must be delivered in a form that the receiving brokerage, lawyer, or notary can verify as secure funds. While requirements vary slightly by province and by brokerage policy, the following options are most commonly accepted:
1. Bank Draft or Certified Cheque (Most Common and Preferred)
These are considered the standard across major provinces such as Ontario, B.C., and Alberta because the funds are guaranteed.
Why sellers prefer them:
- Cleared funds
- Extremely low risk of NSF
- Can be deposited into trust immediately
- Strengthens the buyer’s offer in competitive markets
2. Wire Transfer or Electronic Funds Transfer (EFT)
Some brokerages and law firms will accept deposits by wire transfer. This is common in provinces where trust accounts are managed by lawyers or notaries (e.g., B.C. and Quebec).
Important considerations:
- Transfers must arrive before the deadline stated in the agreement.
- Buyers should verify the receiving institution’s cut-off times and trust account instructions in advance.
- Proof of transfer may be required.
3. Personal Cheque (Less Common and May Be Rejected)
Personal cheques are sometimes accepted in slower markets or smaller brokerages, but they are generally discouraged.
Limitations:
- Funds can take several days to clear
- Increased risk of NSF
- May weaken the offer in competitive situations
- Some brokerages have policies prohibiting personal cheques entirely
4. Pre-Construction and New Development Purchases
Builders rarely accept personal cheques. Deposits must be paid through:
- Bank draft
- Certified cheque
- Wire transfer
Developers often follow strict deposit schedules set out in the Disclosure Statement or Purchase Agreement.
Why the Deposit Format Matters
Sellers rely on the security of the deposit to protect themselves if a buyer fails to close. For that reason, the APS or purchase contract typically requires the deposit to be provided in a form of immediately available funds, especially in competitive markets.
Failing to deliver the deposit on time or in the required format can put the buyer in breach of contract, even if the offer was accepted.
Refundability and Risks
Whether a deposit is refundable depends on the status of conditions in the purchase agreement:
- Before conditions are waived: If financing, inspection, or other conditions are not met and the buyer legally withdraws, the deposit is returned in full.
- After conditions are waived/fulfilled: If the buyer fails to close, the seller may keep the deposit and may also seek damages if losses exceed the deposit amount.
- Disputes: If both sides claim the deposit, it remains in trust until resolved by mutual release or a court decision.
Deposits vs. Down Payments
It’s important to distinguish between a deposit and a down payment:
- The deposit is paid upfront with the offer and held in trust.
- The down payment is the total amount a buyer contributes toward the purchase price at closing. This amount must meet the minimum requirements set by Canadian mortgage rules (e.g., a minimum of 5% of the purchase price for homes up to $500,000).
- The deposit is credited toward the down payment at closing.
Example: On a $600,000 home with a 10% down payment ($60,000), if you’ve already provided a $20,000 deposit, you’ll only need to bring $40,000 (the remaining balance of the down payment/equity) at closing, which is part of the larger funds transferred to the seller. You will also need to cover closing costs (i.e., legal fees, land transfer tax).
It’s important to distinguish between a deposit and a down payment. The deposit is paid upfront with the offer and held in trust, while the down payment is the total amount you contribute at closing. For a detailed breakdown of how the two differ in timing, purpose, and minimum requirements, see our full guide on Deposit vs Down Payment in Canada.
Real Estate Deposits in Canada
Province-by-province look at typical deposit ranges, common practices, and the regulator overseeing trust accounts. Values are indicative and vary by market conditions and contract terms.
Ontario
2%–5%British Columbia
$10K–$50K / ~5%Alberta
2%–5%Quebec
~1%–5%Atlantic Canada
2%–5%Key Takeaways for Buyers
- Expect to pay a deposit quickly after your offer is accepted.
- Know that it will be applied to your final purchase price.
- Ensure your Agreement of Purchase and Sale clearly outlines when and how the deposit is due, and under what conditions it is refundable.
- Always obtain advice from your real estate lawyer before signing.