Who Holds Your Deposit, and Where? Ontario’s Trust Account and Deposit Rules Explained
Usually due within 24 hours, around 5%, held in the brokerage’s trust account, RECO-insured — and what happens to it if the deal falls through
When buying in Ontario, who holds the deposit, where, and when is it due?
The deposit is usually delivered within 24 hours of the offer being accepted, is generally around 5% of the price (the 5%–10% range), and is given to the listing brokerage to hold in a “trust account.” Per RECO and Ontario Reg 567/05, a trust account is legally kept separate from the brokerage’s operating funds, reconciled monthly, audited by RECO, and protected by RECO deposit insurance (up to $200,000 per claim, against fraud, insolvency, or misappropriation). At closing, the deposit applies to the purchase price; if the deal collapses, the deposit stays in the trust account until both buyer and seller agree in writing to release it, or a court or arbitrator directs.
Sources: RECO (Real Estate Council of Ontario); Ontario Regulation 567/05; TRESA. Deposit insurance cap: $200,000 per claim.
“Arthur, the offer’s accepted and my agent says to send the deposit tomorrow — who does this money go to? And if I don’t end up buying, do I get it back?” The deposit is the first real money in a purchase, it’s not a small sum, and many buyers feel uneasy about it. Ontario actually has a whole set of strict protections: the deposit doesn’t go into the seller’s pocket or an agent’s personal account — it sits in a regulated, insured trust account. Here’s who holds it, where, when it’s due, and what happens if the deal falls apart.
Who holds it and where: the trust account
In Ontario, when you transact through a registered agent, the deposit generally goes to the listing brokerage, which places it in a trust account — not directly to the seller, and not into an agent’s personal account. Trust accounts are governed by TRESA and Ontario Reg 567/05: the money is strictly separated from the brokerage’s operating funds, reconciled monthly, and audited by RECO. The listing brokerage must place the deposit into trust as soon as it arrives. The whole design exists to keep your money safe and traceable, “frozen” with a neutral third party until closing.
When it’s due and how much
What protects your money: RECO deposit insurance
ℹ️RECO deposit insurance covers fraud, insolvency, or misappropriation at the agent/brokerage level (up to $200,000 per claim). It protects whether your money is safe in the trust account — it does not mean “I changed my mind, so I’m guaranteed a full refund.” That depends on the contract conditions and lawful termination.
If the deal collapses, who gets the deposit
Practical reminders: don’t overlook these
First, confirm the recipient and account: the deposit should go to the listing brokerage’s trust account — verify the details through a reliable channel before transferring, and beware email fraud that alters account numbers (this scam is real in real estate). Second, keep your records: transfer confirmations and receipts. Third, nail down your conditions: whether you get the deposit back often turns on how your offer’s conditions are structured and whether you terminate lawfully — not simply “I changed my mind, so refund me.”
🚨Before transferring the deposit, verify the receiving account details through a reliable channel such as a phone call. Real estate has scams that alter emails and forge transfer instructions — a six-figure deposit sent to the wrong account is extremely hard to recover.
Frequently Asked Questions
Does the deposit go to the seller?
Usually not. When transacting through a registered agent, the deposit goes to the listing brokerage to hold in a regulated trust account, not directly to the seller or into an agent’s personal account. At closing it’s applied to your purchase price.
How much is the deposit, and when is it due?
Most Ontario deposits are around 5% of the price (up to 10% in hot markets), usually delivered within 24 hours of the offer being accepted, per the contract terms. It’s not an extra cost — it applies to the purchase price at closing.
If the purchase doesn’t go through, do I get the deposit back?
The deposit stays in the trust account until both buyer and seller agree in writing how to release it, or a court/arbitrator directs — the brokerage can’t decide unilaterally. Whether you get it back often depends on your offer’s conditions and lawful termination; terminating lawfully because a condition wasn’t met is generally more favourable.
Is the deposit safe in a trust account?
It’s protected by RECO deposit insurance against agent/brokerage fraud, insolvency, or misappropriation, up to $200,000 per claim, and the trust account is reconciled monthly and audited by RECO. It’s an institutional safeguard for buyer funds in Ontario’s process.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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