Deposits go into a brokerage’s Real Estate Trust Account, which must be in Ontario, and must be deposited within five business days — a definition that excludes Saturday by name and catches Sunday only through the Legislation Act, 2006. Interest goes to you “unless otherwise provided by contract”. If the deal fails and entitlement is disputed, no one at the brokerage can decide who gets the money — section 27(1)(d) permits disbursement “only in accordance with the terms of the trust”, and no provision anywhere gives the brokerage, the broker of record, RECO, the registrar or the discipline committee power to adjudicate entitlement. In practice that means a mutual release or a court order. After two years unresolved money must be paid to the administrative authority — without prejudice to anyone’s claim.
A deposit on an Ontario purchase goes into a brokerage’s real estate trust account. If the deal closes, nobody thinks about it again. If the deal falls apart, one question matters more than any other, and the answer surprises almost everyone.
Nobody at the brokerage can decide who gets the deposit. Not the agent, not the broker of record, not RECO, not the registrar, not the discipline committee. I searched the Act and every regulation under it: no provision anywhere confers a power to adjudicate entitlement to a deposit. The brokerage is a stakeholder, not a judge.
What the brokerage must do with the money
Section 27(1) of the Act requires every brokerage to maintain a trust account in Ontario at a bank, loan or trust corporation, or credit union; to deposit into it all money that comes into its hands in trust; to keep that money “separate and apart from money belonging to the brokerage”; and — the pivotal clause —
“(d) disburse the money only in accordance with the terms of the trust.”
The account must be designated a Real Estate Trust Account (O. Reg. 567/05, s.15), there may be only one unless the registrar consents in writing (s.14), and no transaction may occur unless it is authorised by the brokerage’s broker of record (s.19).
Five business days — and Saturday is not a business day
Section 17(1) of O. Reg. 567/05 gives a brokerage five business days to deposit trust money. Subsection (2) defines the term unusually:
“‘business day’ means a day that is not, (a) Saturday, or (b) a holiday within the meaning of section 87 of the Legislation Act, 2006.”
Read it literally: Sunday is not named. Sunday is excluded only because section 87 of the Legislation Act, 2006 folds it into the definition of “holiday”. It is worth quoting this one as written rather than paraphrasing it as “excluding weekends and holidays”, because the drafting is what it is.
Interest belongs to you, unless your contract says otherwise
Section 27(2) requires a brokerage to disclose in writing the terms on which it deposits the money, including whether the account is interest bearing and the rate the brokerage receives. Section 27(3): “Unless otherwise provided by contract, all interest on the trust money … shall be paid to the beneficial owner.”
Those four words do a lot of work. Standard-form agreements commonly reallocate interest, and the Act permits that. If it matters to you, it is a term to negotiate, not a right to assume. On a variable-rate account, section 16 requires the brokerage to tell you the current rate on request.
The failed deal: what the law actually says
TRESA does not say the deposit is forfeited, returned, or split. It says nothing about entitlement at all. Three provisions define the brokerage’s box:
| Provision | What it requires |
|---|---|
| Act, s.27(1)(d) | Disburse only in accordance with the terms of the trust |
| O. Reg. 567/05, s.18 | Where a disbursement is required by the terms of the applicable trust, disburse as soon as practicable, subject to those terms |
| O. Reg. 567/05, s.22.11 | Where the client’s agreement requires the registrant to deliver a deposit, deliver it in accordance with the agreement |
Read section 18 carefully: the duty to pay out promptly is conditional on the disbursement being required by the trust terms. Where entitlement is contested and the agreement does not resolve it, section 18 does not authorise release — let alone require it.
Which is why, in practice, a disputed deposit is released by a mutual release signed by both parties, or by a court order. Those are what “the terms of the trust” resolve to. A brokerage refusing to hand over a disputed deposit is not being obstructive; it is doing the only thing section 27(1)(d) permits.
The two-year escape hatch
What TRESA does regulate is the stalemate. Two provisions, and they are not the same:
| Provision | Trigger | Clock starts |
|---|---|---|
| s.27(4) | Money held two years and entitlement “has not been determined or is unclear” | On receipt |
| s.27(5) | Two years after the person became entitled, and that person cannot be located | On entitlement |
In both cases the money goes to the administrative authority, or to the Minister of Finance if there is none. Before paying over under section 27(5) the brokerage must use reasonable efforts to locate the person (s.27(6)) and hand over the information needed to work out who is entitled (s.27(7)).
After that, section 27(8) requires the authority to hold the money in trust until claimed. Section 27(9) confines any interest earned to covering the costs of administering the fund and processing claims. Section 27(11): after five years the authority must pay it to the Minister of Finance within one year. And two provisions worth knowing if this ever happens to you:
- s.27(13) — payment over is made “without any prejudice to the rights of any person to claim entitlement”. Your claim survives the transfer.
- s.27(14) — whoever holds it “shall pay it to the person entitled to the money”.
Section 39 of O. Reg. 567/05 exempts amounts under $25 from the whole regime, though a brokerage may opt in.
Shortfalls must be reported immediately
Section 14 of O. Reg. 579/05 requires a trust shortfall to be reported immediately. There is no materiality threshold and no grace period. For a broker of record that is one of the sharpest obligations in the whole regime.
What this means in a collapsing deal
- Do not expect the brokerage to take your side. It cannot. Section 27(1)(d) leaves it no discretion.
- The practical route is a mutual release. Both signatures, and the money moves.
- Failing that, it is a court matter, and the deposit sits where it is meanwhile.
- Nothing is forfeited automatically. Forfeiture is a question of contract law and, if contested, for a judge.
- Two years is not a deadline on your rights — section 27(13) preserves them — but after two years the money may no longer be at the brokerage.
- Check who gets the interest before you sign, not after.
Deal fell apart and your deposit is sitting in someone else’s trust account?
This is one of the most upsetting situations in residential real estate, and the single most useful thing to understand early is that the brokerage genuinely cannot help you by choosing a side. Tell me where things stand and I will explain what the agreement and the legislation actually permit, what a mutual release does, and at what point this stops being a real estate question and becomes a legal one. I am not a lawyer and I will tell you when you need one.
connect@jatindua.com · 437-987-1925 · Book a free consultation
Confidential. Read personally and answered within 24 hours. I never share, sell or distribute your information.
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Frequently asked questions
Who decides who gets the deposit when a deal falls through?
Not the brokerage. Section 27(1)(d) of the Trust in Real Estate Services Act, 2002 requires a brokerage to disburse trust money only in accordance with the terms of the trust, and section 18 of O. Reg. 567/05 requires prompt disbursement only where the disbursement is required by the terms of the applicable trust. No provision in the Act or any regulation gives the brokerage, the broker of record, RECO, the registrar or the discipline committee any power to determine entitlement. In practice a disputed deposit is released by a mutual release signed by both parties or by a court order.
How long does a brokerage have to deposit my deposit?
Five business days, under section 17(1) of O. Reg. 567/05. Section 17(2) defines a business day as a day that is not Saturday or a holiday within the meaning of section 87 of the Legislation Act, 2006. Sunday is not named in the regulation; it is excluded because section 87 of the Legislation Act includes it in the definition of holiday.
Who gets the interest on a deposit?
Section 27(3) of the Act provides that unless otherwise provided by contract, all interest on trust money shall be paid to the beneficial owner. The words unless otherwise provided by contract are significant — standard form agreements commonly reallocate interest and the Act permits that. Section 27(2) requires the brokerage to disclose in writing the terms on which it holds the money, including whether the account is interest bearing and the rate the brokerage receives, and section 16 of O. Reg. 567/05 requires a brokerage using a variable rate account to disclose the current rate on request.
Is my deposit automatically forfeited if I cannot close?
Nothing in the Trust in Real Estate Services Act, 2002 or its regulations says a deposit is forfeited, returned or divided. The legislation regulates only how the money is held and what happens if entitlement remains unresolved. Whether a deposit is forfeited is a question of contract law under the agreement of purchase and sale and, where contested, a matter for the courts. This page is not legal advice and a disputed deposit is a situation to take to a lawyer.
What happens to a deposit nobody claims?
Two different rules. Under section 27(4), if a brokerage holds money in trust for two years and entitlement has not been determined or is unclear, it must pay the money to the administrative authority or, if there is none, the Minister of Finance. Under section 27(5), if it holds money for two years after the person became entitled to it and that person cannot be located, the same payment is required — but that clock runs from entitlement rather than from receipt, and section 27(6) first requires reasonable efforts to locate the person. The authority holds the money in trust until claimed and, after five years, must pay it to the Minister of Finance within one year. Section 27(13) states that payment over is without prejudice to any person’s right to claim entitlement.
Can the broker of record release a deposit to me if the other side will not sign?
No. Section 19 of O. Reg. 567/05 requires that no trust transaction occur unless authorised by the broker of record, but that is an internal control, not a power to decide entitlement. The broker of record is still bound by section 27(1)(d) of the Act to disburse only in accordance with the terms of the trust. Where the agreement does not resolve who is entitled and the parties do not agree, the trust terms do not authorise release to either side.
Related reading
- Designated representation in Ontario: what changed
- Competing offers: what a seller can actually let you see
- Representation agreements: what the rules do and do not say
- RECO complaints and discipline: what actually happens
Sources
Every figure on this page traces to one of these, and each was read on 1 September 2026. Primary sources only — statute, regulation, and the government or agency that administers the rule. Where I could not verify something from a primary source, the page says so instead of guessing.
- Trust in Real Estate Services Act, 2002 (formerly the Real Estate and Business Brokers Act, 2002), S.O. 2002, c. 30, Sched. C. Government of Ontario e-Laws, read 2 September 2026 through the e-Laws JSON API. Consolidation period from 1 December 2023 to the e-Laws currency date, which the currency-date endpoint gives as 28 August 2026. The words designated representative, designated representation agreement, brokerage representation agreement and multiple representation do not appear anywhere in the Act; the regulation-making power is in section 51(1), paragraphs 18 v and 19 to 19.3. Accessed 1 September 2026.
- O. Reg. 567/05, General, under the Trust in Real Estate Services Act, 2002. Government of Ontario e-Laws, read 2 September 2026. Contains the entire operative designated representation regime at sections 1, 2, 13.3.1, 13.4, 22 to 22.0.5, the competing offer rules at sections 22.7 and 22.8, the deposit rules at sections 14 to 19, the disclosure of interest rule at section 22.9 and the financial benefit rule at section 23.1. Amended by O. Reg. 357/22 and O. Reg. 235/23, both effective 1 December 2023. Accessed 1 September 2026.
- O. Reg. 365/22, Code of Ethics, under the Trust in Real Estate Services Act, 2002. Government of Ontario e-Laws, read 2 September 2026. The current code of ethics, in force 1 December 2023. The word customer appears in it zero times. Section 8 imposes the best interests duty on a registrant that represents a client; section 10 prohibits providing services, opinions or advice to a self-represented party; section 12 requires written client consent before disclosing confidential information. Accessed 1 September 2026.
- O. Reg. 367/22, Discipline Committee, under the Trust in Real Estate Services Act, 2002. Government of Ontario e-Laws, read 2 September 2026. Section 6 imposes a two-year limitation on referring a matter to the discipline committee. Section 15 requires the registrar to publish final decisions on the administrative authority website and in at least one other manner, and to keep them available for at least sixty months. Accessed 1 September 2026.
- O. Reg. 579/05, Educational Requirements, Insurance, Records and Other Matters. Government of Ontario e-Laws, read 2 September 2026. Section 19 sets the general record retention period at six years; section 20 requires a brokerage acting for a seller to retain an unsuccessful written offer, or a document containing nine prescribed particulars about it, for at least one year. Section 14 requires trust shortfalls to be reported immediately. Accessed 1 September 2026.
- O. Reg. 580/05, Code of Ethics (revoked). Government of Ontario e-Laws. Carries the notice that the regulation was revoked on 1 December 2023, by O. Reg. 365/22, section 17. This is the former code of ethics, which contained the in-house appeals committee at sections 42 to 45 that no longer exists. Accessed 1 September 2026.
- Licence Appeal Tribunal, General Service — laws, rules and decisions. Tribunals Ontario, page modified 20 February 2026. Lists the Trust in Real Estate Services Act, 2002 among the statutes the Licence Appeal Tribunal hears appeals under, and states that decisions are also posted on the Canadian Legal Information Institute website. Accessed 1 September 2026.
- Legislation Act, 2006, S.O. 2006, c. 21, Sched. F. Government of Ontario e-Laws. Section 87 defines holiday, which is how Sunday is excluded from the five business day deposit rule in O. Reg. 567/05, section 17, even though Sunday is not named in that section. Accessed 1 September 2026.
- Real Estate Council of Ontario. The administrative authority that administers the Trust in Real Estate Services Act, 2002. Every path on this website returned HTTP 403 to automated retrieval on 2 September 2026, an affirmative server-side block rather than an absence, so nothing on this page relies on RECO material. Every rule stated here is quoted from the statute or regulation on e-Laws, which is the authoritative source in any event. Accessed 1 September 2026.
About the author — Jatin Dua, Broker of Record
I’m the Broker of Record at RE/MAX Quantum Realty, 799 The Queensway in Etobicoke. A broker of record is the person legally accountable for a brokerage’s compliance with the Trust in Real Estate Services Act, 2002 and its regulations, so these pages are written from the rulebook I am personally answerable to.
Everything below is quoted from the statute or the regulation, with the section number, so you can check it yourself rather than take my word for it. Where the law is silent, or where a widely repeated claim turns out not to be in the legislation at all, the page says so plainly. This is general information about the rules, not legal advice about your situation. connect@jatindua.com or 437-987-1925.