A sum of money the buyer puts forward when making an offer, held in trust by the listing brokerage as a sign of good faith. In the GTA, deposits typically range from 3% to 5% of the purchase price. The deposit is applied toward the purchase price on closing and is not an additional cost on top of the sale price.
Why It Matters
A strong deposit signals to the seller that you're serious and financially capable. If you breach the agreement after going firm, the seller may be entitled to keep your deposit -- which can be tens of thousands of dollars. Treat it with the respect it deserves.
Real-World Example
You offer $780,000 on a condo in Midtown Toronto and include a $30,000 deposit (roughly 3.8%). The deposit cheque is due within 24 hours of acceptance and is held in the listing brokerage's trust account. On closing day, that $30,000 is credited toward your purchase price, so your remaining balance owing (minus your mortgage) is reduced accordingly.
Ontario & GTA Context
In Ontario, deposits are held in the listing brokerage's trust account, regulated by RECO. If a deal falls apart due to an unfulfilled condition, the deposit is returned to the buyer. If the buyer defaults on a firm deal, the seller can make a claim to the deposit through the brokerage. Disputes over deposits may be resolved through the courts or mutual release.
How It Works in Practice
Have your deposit funds ready in a liquid account before you start making offers. In competitive situations, a larger deposit (5% or more) demonstrates financial strength. Most brokerages require a certified cheque or bank draft within 24 hours of offer acceptance.
Common Questions
Is the deposit the same as the down payment?▾
Can I get my deposit back if the deal falls through?▾
How much deposit should I offer in the GTA?▾
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