A deposit is a sign of good faith that the buyer, who has contracted to purchase the property, will complete the transaction on the date specified in the contract.
In Ontario, deposits are due 24 hours following the acceptance of an Agreement of Purchase and Sale, unless agreed to otherwise in the Agreement.
If a buyer has a change of heart for whatever reason and no longer wants to purchase the property, can the buyer just not pay the deposit to nullify the contract?
The answer is no! Failure to pay the deposit is a breach of contract and may result in the buyer getting sued by the seller for any damages the seller suffers in selling to a different buyer. However, the legal costs may prove this to be not worthwhile.
ERIE’S EDGE PRO TIP! Seller may consider requiring deposits accompany the agreement of purchase and sale by way of certified cheque or bank draft and for a minimum of 5% of the purchase price.