OTTAWA REAL ESTATE
How the Deposit Works When Selling a Home in Ottawa
When you sell a home in Ontario, the deposit is money the buyer puts down with their offer to show they’re serious. It’s held in trust — usually in the listing brokerage’s real estate trust account — credited toward the purchase price at closing, and it’s part of your protection if the buyer breaches a firm deal. The deposit isn’t a fee or an extra payment; it’s the buyer’s own money, applied to what they owe, that also signals how committed and capable they are.
Here’s how the deposit works from the seller’s side, from the offer through to closing and everything in between.
What a deposit is (and isn’t)
A deposit is a sum the buyer provides, typically with or shortly after their offer, to demonstrate good faith and financial capacity. It is not an extra cost to the buyer — it’s applied toward the purchase price at closing — and it’s not the seller’s money to spend during the deal. It sits in trust until the transaction closes or ends.
For you as the seller, the deposit does two jobs: it signals the buyer’s seriousness and ability to follow through, and it provides a measure of security if the buyer walks away from a firm, binding deal. A larger deposit does both jobs better, which is why the deposit is one of the terms worth weighing when you compare offers.
How much is a typical deposit in Ottawa?
There’s no legislated amount — the deposit is negotiable and stated in the offer. In the Ottawa market, deposits are commonly expressed as a percentage of the purchase price, and a larger deposit signals a more serious, better-resourced buyer. What matters more than a rule of thumb is the deposit relative to the price and to the strength of the rest of the offer.
A small deposit on a large purchase can be a yellow flag about the buyer’s capacity; a substantial one reassures you the buyer has real skin in the game. When two offers are otherwise similar, the one with the stronger deposit is generally the safer bet. Local market conditions tracked by the Ottawa Real Estate Board influence what’s customary, and your agent can advise what’s appropriate for your price range.
Deposit norms also shift with the market. In a competitive market, buyers often offer larger deposits to strengthen their bids, while in a slower market deposits can shrink — a pattern that tracks broader conditions reported by the Canadian Real Estate Association and housing data from Statistics Canada. Reading what’s customary right now, rather than a fixed rule, is part of judging whether a given deposit is strong or weak.
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When is the deposit paid?
The timing is set in the offer. Deposits are commonly due “upon acceptance” — typically within 24 hours of the offer being accepted — or sometimes “herewith” (with the offer itself). The offer specifies the amount, the timing, and the form (usually a certified cheque, bank draft, or electronic transfer).
As a seller, prompt delivery of the deposit is an early sign the deal is on solid footing. A buyer who’s slow or evasive about delivering the agreed deposit is a buyer to watch closely. Provincial information on the agreement of purchase and sale, which sets these terms, is available from the Government of Ontario.
Where the deposit is held
The deposit doesn’t go to you — it’s held in trust, most often in the listing brokerage’s real estate trust account, until the deal closes or is otherwise resolved. Real estate trust accounts and how deposits must be handled are governed by strict rules under the Real Estate Council of Ontario, which regulates brokerages and the trust obligations around client money.
This protects everyone: the money is secure, it can’t be misused during the deal, and its release is governed by the agreement and the law. You don’t receive or control the deposit while the transaction is in progress — it’s credited to you as part of the proceeds only at closing.
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What happens to the deposit at closing
At closing, the deposit is applied toward the purchase price. In practice, the lawyers and the trust account holder account for it: the buyer’s total obligation is reduced by the deposit already paid, and the funds form part of what flows to you as the seller through your lawyer. So the deposit isn’t returned to the buyer or paid separately to you — it simply becomes part of the money you receive at closing, having been credited against the price.
Because the deposit is folded into the overall settlement, sellers sometimes don’t “see” it as a distinct amount — it’s baked into the net proceeds their lawyer disburses. Understanding this helps set expectations for closing day.
What happens if the deal falls through?
This is where the difference between a conditional and a firm deal matters most. If a buyer withdraws because a condition in a conditional offer wasn’t met — their financing didn’t come through, say — the deposit is typically returned to the buyer, subject to the agreement’s terms, because they exercised a right the offer gave them.
If a buyer walks away from a firm, unconditional deal with no legal basis, they’re in breach, and the deposit is at stake — it’s the first thing a seller can look to as a remedy. That said, the release of a disputed deposit isn’t automatic: it generally requires the agreement of both parties or a court order, so a genuine dispute can take time to resolve. This is exactly why a firm deal with a solid deposit is such a strong position, and why the deposit’s size and the offer’s conditions should be weighed together.
Structured and “top-up” deposits
Deposits aren’t always a single payment. Sometimes an offer proposes a smaller initial deposit with the agreement, then a larger “top-up” once the buyer waives their conditions and the deal goes firm. For a seller, this can be reasonable — the bigger money lands when the deal becomes certain — but it also means your security during the conditional period is smaller. Weigh it accordingly.
If you’re comparing an offer with a modest deposit due only on firming-up against one with a strong deposit up front, the second gives you more comfort earlier. Neither is automatically right; the point is to read the deposit structure, not just the headline figure, and to understand exactly when the buyer’s money is actually at stake.
When deposits go wrong
Occasionally a deposit becomes a problem: a cheque that doesn’t clear, a buyer slow to deliver, or a dispute over who’s entitled to the deposit when a deal collapses. A firm deal that a buyer abandons without cause can leave the deposit contested, and because releasing a disputed deposit generally requires both parties’ agreement or a court order, these can drag on. A buyer’s ability to fund the deposit and the purchase is shaped by borrowing costs tied to the Bank of Canada‘s rate decisions, so financing stress can occasionally show up as deposit trouble.
The practical protection is on the front end: a solid deposit from a well-qualified buyer, delivered promptly in cleared funds, rarely becomes a dispute. It’s the thin deposit from a shaky buyer that turns into a headache.
Why a bigger deposit favours you
A larger deposit works in your favour in three ways. It signals a serious, financially capable buyer who’s less likely to walk. It gives you more security if a firm deal is breached, since there’s more at stake for the buyer. And it can be a tiebreaker when you’re comparing offers of similar price — the stronger deposit reduces your risk.
When you weigh offers, then, don’t look only at price. A slightly lower offer with a large deposit and firm terms can be safer and ultimately better than a higher one with a token deposit and multiple conditions. Reading the whole offer this way is central to negotiating well.
Deposit vs down payment: clearing up the confusion
Buyers and sellers often mix these up. The deposit is paid up front with the offer and is part of the seller’s transaction — it’s credited toward the price and held in trust. The down payment is the larger sum the buyer contributes toward the purchase from their own funds at closing, with the rest covered by their mortgage; how much a buyer needs relates to mortgage rules explained by the Financial Consumer Agency of Canada.
The deposit is usually part of, and counts toward, the buyer’s down payment. As a seller, you don’t need to manage the down payment — that’s between the buyer and their lender — but understanding the distinction helps you interpret an offer correctly. Buyers researching on REALTOR.ca and through CMHC sometimes arrive with the two terms tangled.
Jason Polonski is a full-time Ottawa REALTOR® with Right at Home Realty who helps sellers read the deposit — and everything around it — as part of weighing offers, seven days a week across Kanata, Stittsville, Barrhaven, Manotick, and the wider west end.
His Bachelor of Commerce from Concordia University, a double major in Marketing and Finance, means the financial signals a deposit sends are exactly the kind of thing he evaluates when advising which offer is genuinely strongest. Drawing on work with hundreds of Ottawa buyers and sellers, Jason makes sure the deposit protects you and that you understand precisely how it flows from offer to closing. If you’re weighing offers or preparing to list, a clear conversation about deposits and terms is part of getting the strongest, safest deal.
OTTAWA REAL ESTATE How the Deposit Works When Selling a Home (FAQs)
It’s money the buyer puts down with their offer to show good faith and financial capacity. It’s held in trust, credited toward the purchase price at closing, and provides some protection to the seller if the buyer breaches a firm deal — it’s not an extra fee.
There’s no legislated amount; it’s negotiable and stated in the offer, often as a percentage of the price. A larger deposit signals a more serious, better-resourced buyer, so it’s one of the terms worth weighing when comparing offers.
It’s held in trust, usually in the listing brokerage’s real estate trust account, under strict rules set by the Real Estate Council of Ontario. The seller doesn’t receive or control it during the deal — it’s credited as part of the proceeds only at closing.
It’s applied toward the purchase price, reducing what the buyer owes, and forms part of the money that flows to the seller through the lawyers. It isn’t paid separately — it’s folded into the net proceeds you receive.
If a buyer withdraws under a valid condition in a conditional offer, the deposit is typically returned. If a buyer breaches a firm deal without legal basis, the deposit is at stake — though releasing a disputed deposit usually requires both parties’ agreement or a court order.
No. The deposit is paid up front with the offer and held in trust; the down payment is the buyer’s own funds contributed at closing, with the rest covered by their mortgage. The deposit usually counts toward the buyer’s down payment.
