Can the Seller Use the Buyer’s Deposit Before Closing? Early Deposit Release in Ontario
Follow one deposit from the moment it changes hands to the day it leaves the trust account. Every exit has a signature on it, and every signature moves the risk to someone.
Where does a buyer’s deposit actually sit before closing, and what has to happen for the seller to get it early?
It sits in trust, and the seller can get it before closing only if the buyer and seller agree to that in writing. Under the standard OREA Form 100, the deposit goes to the Deposit Holder to be held in trust pending completion or other termination of the agreement and credited toward the price on completion. A brokerage holding it must deposit it in its trust account within five business days and, under TRESA s.27(1)(d), may pay it out only in accordance with the terms of the trust. So the money leaves on closing, on a release both parties sign, on a court order, or on a different term the buyer and seller wrote into the agreement themselves. An early release to the seller is the last of those: it has to be agreed, not assumed.
Source: OREA Form 100, Agreement of Purchase and Sale; Trust in Real Estate Services Act, 2002, s.27(1); O. Reg. 567/05, s.17(1) (Ontario e-Laws, 2026)
I’m Arthur Zhao.
The day after an offer is accepted, a buyer drops off a bank draft at a brokerage front desk. Someone at the desk logs it, and for the next several weeks that piece of paper (and then the money it turns into) becomes the most closely watched sum in the whole transaction, even though nobody is supposed to touch it.
Sooner or later, someone on the selling side asks whether it has to just sit there. It is a fair question, and the answer is easier to understand if you stop thinking about who owns the deposit and start tracking where it is and what document controls each move. This piece follows one deposit stop by stop, then lays out every legitimate exit from the trust account, who has to sign for it, and who carries the risk once it goes.
A note on scope: everything below is about deposits held by a real estate brokerage. Deposits paid to a lawyer’s trust account run under a different set of rules, which I haven’t covered here.
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The buyer hands it over
Notice who receives it. The form leaves the name blank and calls whoever is filled in the Deposit Holder. From that moment, the same sentence sets the money’s job description: it is “to be held in trust pending completion or other termination of this Agreement and to be credited toward the Purchase Price on completion.” That sentence is the trust term everything else in this article keeps coming back to.
Into the brokerage’s trust account
Real Estate Trust Account (s.15) and kept at a bank, loan or trust corporation, or credit union in Ontario (TRESA s.27(1)(a)).
So the realistic window between the buyer handing over a draft and the money being in trust is the 24-hour delivery window plus up to five business days for the brokerage to bank it.
The waiting period
- It is fenced off. TRESA s.27(1)(c) requires the brokerage to keep trust money separate and apart from its own money at all times.
- By default it earns nothing. Form 100 says that, unless the agreement provides otherwise, the deposit goes into the Deposit Holder’s non-interest bearing trust account and no interest is earned, received or paid. TRESA s.27(2) separately requires the brokerage to disclose in writing the terms on which it holds the money, including whether it is interest bearing, and s.27(3) says any interest belongs to the beneficial owner unless a contract says otherwise.
- It is insured against the brokerage, not against the deal. According to RECO (2026), every broker and salesperson is required by law to participate in an insurance program that includes consumer deposit insurance, at no cost to the consumer. The coverage responds to events such as brokerage theft, fraud, insolvency, or misappropriation of funds, and RECO puts the limits at up to $200,000 per claim and $4 million for all claims related to a single event, with no deductible.
Hold on to that third point. It matters a great deal at the last exit.
The ways out of a trust account
Once the money is in trust, the brokerage is not the one who decides where it goes. TRESA s.27(1)(d) says the brokerage must disburse the money only in accordance with the terms of the trust, and O. Reg. 567/05 s.19 adds an internal control: no transaction involving trust money unless it is authorized by the brokerage’s broker of record. What follows are the exits that fit those rules. They are not steps in a sequence; any given deposit takes exactly one of them.
Exit A: Completion
This is the exit the standard form is built around. On closing, the deposit is credited toward the Purchase Price, which is the second half of the Form 100 trust sentence. Because payment at that point is what the trust terms call for, O. Reg. 567/05 s.18 applies: when a disbursement request is required by the terms of the trust, the brokerage must disburse as soon as practicable, subject to those terms.
Who signs: nobody new. The agreement both parties already signed is the authority, and the broker of record authorizes the transaction internally.
Who carries the risk: effectively no one by this point; the money has done its job.
Exit B: The deal ends and both sides sign a release
The other half of the trust sentence is “or other termination.” Form 100 itself names several situations where the deal ends and the buyer gets money back: an offer that isn’t accepted in time is null and void and the deposit is returned in full without interest (section 1); a valid title objection the seller can’t fix ends the agreement and all monies paid are returned without interest or deduction (section 10); and substantial damage before completion lets the buyer terminate and have all monies returned (section 14).
When the parties agree on who gets the money, RECO describes the paper trail: the brokerage disburses in accordance with a mutual release (consent) form signed by both the buyer and seller.
Who signs: both parties.
Who carries the risk: whoever signs away a claim they later wish they had kept. The release is the instruction; the brokerage follows it.
Exit C: A court order
If the parties cannot agree, the money does not move on anyone’s say-so. RECO states that in a dispute over ownership of a deposit, a brokerage can only disburse in accordance with a mutual release signed by both parties or by following instructions in a court order, and that your lawyer can advise on the steps.
Who signs: a judge, in effect.
Who carries the risk: both parties, in time and legal cost. And RECO is explicit that its consumer deposit insurance does not respond to a failed transaction where the parties simply can’t agree on who gets the deposit.
Exit D: A term in the agreement that says otherwise
This is the exit built for getting the money to the seller before closing. Look again at how Form 100 is worded: the deposit is held in trust pending completion or other termination, and goes into the non-interest bearing trust account “unless otherwise provided for in this Agreement.” The form expects that parties may write different terms.
My reading, and it is an inference from the wording rather than a quoted rule: because the brokerage must pay out only on the terms of the trust, and the standard trust term says “pending completion,” a brokerage holding a deposit under the unmodified form has no basis for releasing it to the seller early. To get there, the buyer and seller have to change the terms themselves, in the agreement or a signed amendment, so that an early release is what the trust calls for. The law is not banning anything here; it is insisting that the money follow whatever the parties actually agreed.
Who signs: both the buyer and the seller, with the broker of record authorizing the disbursement (O. Reg. 567/05 s.19).
Who carries the risk: mostly the buyer (again my inference; see the comparison below).
⚠️Inference, not a quoted rule: the statute and regulation say the brokerage must disburse in accordance with the terms of the trust. Whether a particular early-release clause actually changes those terms, and what it should say about repayment if the deal fails, is a drafting question for the buyer’s and seller’s lawyers, not for the brokerage holding the money.
The fallback: two years with no answer
There is one more way out that nobody plans for. Under TRESA s.27(4), if a brokerage has held money in trust for two years and entitlement has not been determined or is unclear, it must pay the money to the administrative authority. Section 27(5) does the same when the person entitled to the money cannot be located after two years, and s.27(6) requires reasonable efforts to find them first. In Ontario that administrative authority is RECO, which the government has delegated to administer and enforce TRESA.
What changes the moment the deposit leaves trust early
💡 My personal view: the person holding the deposit has the least say over it. A brokerage trust account is a set of instructions with money attached, and the only people who can rewrite those instructions are the two who signed the agreement. So when a seller asks “can I use the deposit,” the useful next question isn’t whether the brokerage will allow it. It’s whether the buyer will sign a change, and what the buyer’s lawyer will want in exchange for moving the money out of the one place that is fenced off and insured against the brokerage.
- Trust in Real Estate Services Act, 2002, s.27 (trust account rules)
- O. Reg. 567/05 (General), ss.15, 17(1), 18, 19
- RECO, Consumer deposit insurance
- RECO, What we do
- OREA Form 100, Agreement of Purchase and Sale (deposit clause; sections 1, 10 and 14)
Real Estate Deposit Trust Account Ontario →The Home-Buying Deposit in Ontario: How Much, the 24-Hour Rule, and When It’s Refundable →The Buyer’s Deposit Cheque Bounced. Can I Keep the Deposit and Walk? Read This Before You Do Anything →Ontario Home Buying Guide →
Frequently Asked Questions
Does my deposit earn interest while it waits in trust?
Not under the standard OREA Form 100, which says that unless the agreement provides otherwise the deposit goes into a non-interest bearing Real Estate Trust Account and no interest is earned or paid. The parties can agree otherwise, and TRESA s.27(2) requires the brokerage to disclose in writing whether the account bears interest. Where interest is earned, s.27(3) gives it to the beneficial owner unless a contract says otherwise.
How long does the brokerage have to put my deposit cheque in the bank?
Five business days. O. Reg. 567/05 s.17(1) requires a brokerage to deposit money it receives in trust into its trust account within five business days. That clock starts after you deliver it, which for an Upon Acceptance deposit under Form 100 means within 24 hours of acceptance.
Who inside the brokerage has to approve money leaving the trust account?
The broker of record. O. Reg. 567/05 s.19 says a brokerage shall not engage in any transaction involving trust money unless the broker of record authorizes it. That approval sits on top of the rule in TRESA s.27(1)(d) that the money can only be paid out on the terms of the trust.
As the buyer, what does the standard agreement say happens to my deposit if the seller can’t give good title?
Section 10 of OREA Form 100 says that if a valid title objection can’t be fixed and you won’t waive it, the agreement is at an end and all monies paid are returned without interest or deduction. If the deposit is still in a brokerage trust account, it is paid out on the trust terms. If it was already released to the seller under an early-release term, the return would have to come from the seller (an inference, not a quoted rule).
What happens to a deposit nobody can agree on for years?
Under TRESA s.27(4), if a brokerage has held trust money for two years and entitlement is still undetermined or unclear, it must pay the money to the administrative authority. In Ontario that is RECO, which administers and enforces TRESA. The dispute itself is still for the parties, their lawyers, or a court to resolve.
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