Ontario Real Estate Lawyer Guide:
Deposit Clauses, Who Keeps the Deposit & How to Choose

In Ontario, a standard electronic title transfer must include statements that only a lawyer can make — this is not optional. The moment your offer is accepted, you should be contacting your lawyer. At the very latest, the lawyer needs to be involved 2 to 4 weeks before the closing date to have enough time to review all documents, conduct title searches, and coordinate the financial transfer.

What your lawyer will handle: reviewing the Agreement of Purchase and Sale, conducting a title search for liens or encumbrances, coordinating with your mortgage lender, preparing the transfer documents, and registering the title in your name through the Ontario land registration system (Teraview).

My recommendation: Choose your lawyer before you even start writing offers. The moment you get confirmation that your offer has been accepted, send your lawyer an email the same day. Don’t wait until the week before closing — that’s a recipe for unnecessary stress.

Who holds the deposit? The deposit is held in the listing brokerage’s trust account — not the seller’s personal account. Under TRESA (formerly REBBA), a brokerage must deposit trust money into a designated real estate trust account, keep it separate from its own money, and pay it out only according to the terms of the trust. This protects you as a buyer.

How much should the deposit be? The standard range is 1%–5% of the purchase price. In a competitive seller’s market, a larger deposit signals buyer commitment. In a buyer’s market, 1%–2% is common and acceptable. For resale homes, 5% is conventional. For pre-construction condos, developers often require larger staged deposits — sometimes 15%–20% paid over several months.

When is it due? Most standard offers specify the deposit must be delivered “within 24 hours of acceptance” — some say 48 hours. Payment must be made by bank draft or wire transfer; personal cheques are rarely accepted. Failing to deliver the deposit on time is technically a breach of contract, so arrange this immediately after acceptance.

Scenario 1: The deal closes successfully
On closing day, the deposit is released from trust and applied toward your total purchase price. If you put down a $50,000 deposit on a $1,000,000 home, your lawyer uses those funds as part of your down payment and closing proceeds.

Scenario 2: Buyer exercises a valid condition
If your offer included a financing condition, home inspection condition, or another standard condition, and you formally notify the seller within the specified timeframe that you cannot fulfill it, the deposit is returned to you in full. The brokerage releases the funds without any litigation required. This is why conditions are so important — they are your legal exit ramp.

Scenario 3: Buyer backs out without cause
If you signed a firm offer (no conditions) or all conditions had already been removed and you decide to walk away, the seller can pursue a legal claim to the deposit. Critically, the brokerage cannot release the deposit unilaterally — both parties must agree in writing, or a court order must be obtained. Disputes can drag on for months. This is exactly why you should never sign a firm offer unless you are absolutely certain.

The most common mistake buyers make is choosing their lawyer based on price alone. The cheapest lawyer is not always the best choice for a transaction worth hundreds of thousands of dollars. Look for a law firm that specializes in real estate conveyancing — not a general practice lawyer who handles real estate on the side.

Qualities to look for:

• Focuses primarily on real estate law and conveyancing
• Can clearly explain every document they ask you to sign
• Is responsive — you should be able to reach them or their team within a business day
• Has availability that matches your closing timeline (busy periods in spring/fall can cause delays)
• Comes recommended by your realtor, who has seen them perform under pressure

Fee ranges in Ontario: Legal service fees typically run $1,500–$2,500. You’ll also pay for title insurance ($300–$600), land transfer tax registration, and title search costs. All-in, expect to budget $2,500–$4,000 in legal and closing costs, depending on the property value. These are in addition to land transfer taxes, which are a separate calculation.

Closing day is when ownership officially transfers from seller to buyer. Here is the typical timeline your lawyer follows:

• Morning: Your lawyer receives the mortgage funds from your lender
• Funds assembled: Mortgage funds + your down payment + deposit already in trust = total purchase price
• Transfer: Your lawyer wires the full amount to the seller’s lawyer
• Registration: Once funds are confirmed, your lawyer registers the title transfer in Teraview (Ontario’s land registry)
• Keys released: Your realtor or the listing brokerage releases the keys — typically mid-afternoon

You typically don’t need to be present at the lawyer’s office on closing day — all documents are signed in advance. Your lawyer will send you confirmation once registration is complete and will provide a full reporting letter within a few weeks with all the details and copies of registered documents.

Who holds the deposit in an Ontario real estate transaction?

In Ontario, the deposit is held in the listing brokerage’s designated trust account — not by the seller directly. When a brokerage holds the deposit, the Trust in Real Estate Services Act (TRESA, formerly REBBA) requires it to be kept in a real estate trust account separate from the brokerage’s own money, which protects both parties until closing. The brokerage cannot release the funds without mutual agreement or a court order.

What happens to the deposit if the buyer backs out?

If the buyer exercises a valid condition (such as a financing or home inspection condition) within the agreed timeframe, the deposit is returned in full with no legal proceedings required. If the buyer backs out without a valid condition — such as on a firm offer — the seller may pursue a legal claim to the deposit. However, the funds cannot be released by the brokerage without mutual agreement or a court order.

How much do real estate lawyers charge in Ontario?

Real estate lawyer fees in Ontario typically range from $1,500 to $2,500 for legal services. On top of that, buyers pay for title insurance (roughly $300–$600), land registration fees, and title search costs. Total all-in costs usually land between $2,500 and $4,000 depending on the property price. Choose a lawyer based on experience and responsiveness — not just the lowest quote.