The Deposit Is Late. Now What? A Listing Agent's Playbook for Ontario

The Deposit Is Late. Now What? A Listing Agent's Playbook for Ontario

The offer was accepted last night. The deposit was due today. It isn't here.

What you do next matters.

What the agreement actually says

The standard Ontario Agreement of Purchase and Sale provides different ways to specify when the deposit is due: herewith, upon acceptance, or as otherwise described in the agreement.

• Herewith means the deposit accompanies the offer.

• Upon acceptance means the buyer must deliver the deposit to the deposit holder within 24 hours of acceptance.

• As otherwise described means exactly that: read the deadline the parties actually agreed to. Don't assume.

The agreement also contains a time-is-of-the-essence provision.

If the deposit is not delivered by the contractual deadline, the buyer has failed to comply with the deposit obligation. Where time is of the essence, even a short delay can have serious consequences.

But what those consequences are is a legal question.

Late is a breach. It is not automatically the end.

A buyer who misses the deposit deadline has not done what the agreement required.

That does not automatically mean the Agreement of Purchase and Sale is cancelled, void or at an end.

The seller may have legal rights arising from the breach, but those rights can depend on the wording of the agreement, the circumstances, the timing and what the parties do afterward. Waiver, affirmation and other legal issues can also become relevant.

That is not a determination the listing agent should make.

It is a question for the seller's lawyer.

What the listing agent does that day

• Confirm the facts in writing. Ask the buyer's agent whether the deposit has been delivered, when it was delivered and how. Keep the response in the file.

• Tell your seller immediately. Confirm in writing what the agreement required, when the deposit was due and that it has not been received.

• Direct the seller to their lawyer. The seller should obtain legal advice before deciding how to respond to the breach.

• Tell your broker of record or manager. This is not something to handle casually or off the record.

• Do not create an informal extension. “It's coming tomorrow” is not something an agent should treat as changing the agreement. If the parties intend to extend the deposit deadline, document the extension properly in writing through a signed amendment or as directed by the parties' lawyers.

• Do not independently reject a late deposit. If money arrives after the deadline, escalate the issue to your broker of record or manager and obtain appropriate legal direction rather than deciding yourself what effect receiving or rejecting the money may have.

Most importantly, don't start practising law because a deposit is late.

What never to say to your seller

“Don't worry, this happens all the time.”

You may be encouraging the seller to sit on legal rights without understanding the consequences.

“The deal is dead. Let's relist.”

The agreement may still be binding. Treating the property as available again—or accepting another agreement—while the first agreement may remain in force can create significant legal exposure.

“You can keep the deposit.”

If nothing was paid, there is nothing to keep.

If a deposit has been received and is being held in trust, the brokerage does not decide who is legally entitled to it. Release of disputed trust money is a legal matter and may require the parties' agreement or a court order.

“Just tell them they have until tomorrow.”

You are not personally rewriting your client's contract.

If the deadline is going to change, document the change properly.

You report. The lawyer advises. The seller instructs. The brokerage documents.

Do not declare the agreement terminated, authorize a relisting as though the property is unquestionably free and clear, reject a late deposit, or advise the seller to accept

Ricky Rathore, ABR, SRS, FRI

Founding Partner and Lawyer

Broker of Record and Owner - REMAX Metropolis Realty, Brokerage

A note from the lawyer: this is general information, not legal advice, and reading it doesn't make me your lawyer. Rules change and every situation differs - confirm current requirements with RECO and get advice on your own facts before you act.