Can You Back Out of an Accepted Offer in Ontario in 2027?

Published 2 November 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty

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By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 2 November 2026 · 10 min read — In Ontario you can only exit an accepted offer through a condition or a new-condo rescission right. What it costs to walk away, and how to protect yourself.

Short answer

Usually not once the deal is firm. In Ontario you can exit an accepted offer only if a condition, such as financing or inspection, is not met by its deadline, or within 10 days on a new condo from a developer. Resale homes have no cooling-off period, and new freehold homes only get one from 1 January 2028.

This guide is for buyers in Ontario who have an accepted offer, or are about to sign one, and want to know whether they can still walk away in 2027. You will get the situations where you legally can, the ones where you cannot, what happens to your deposit, and why higher rates and lower prices make this question more serious than it was a few years ago.

Can you back out of an accepted offer in Ontario?

Only if the agreement or a specific law gives you a way out. Once a resale offer is accepted and every condition is met or waived, it is a binding contract. Ontario’s government says plainly that for resale homes there is no rule in law that gives you a set time to cancel without penalty.

That leaves a short list of real exits:

Your situation	Can you walk away?	What usually happens to the deposit
Offer not yet accepted	Possibly, but check the irrevocable time on your offer and get legal advice	Returned if the offer never becomes a contract
Conditional offer, condition not met by its deadline	Usually yes, on the terms of the condition	Usually returned, as the agreement says
Firm deal (conditions met or waived)	No legal right to walk away	Seller will usually claim it, and may sue for more
New condo bought from the developer	Yes, within the 10-day rescission period	Refunded with interest
New freehold home from a builder in 2027	No statutory cooling-off period yet	Depends on the agreement
Resale house or resale condo	No cooling-off period	Depends on the agreement

Source: Ontario government, What to know before buying a home; Condominium Act, 1998, s. 73; Tarion notice on the freehold cooling-off start date. Summary only; your agreement and your lawyer’s advice govern.

I covered the basics in an earlier post on whether a buyer can back out of an accepted offer. This one focuses on what has changed for 2027 and on what to do if you are already in trouble.

Can you cancel an offer before the seller accepts it?

Every Ontario offer sets an irrevocable time: the deadline by which the seller must accept. Offers are normally treated as open until then, and once the seller accepts and you are told, you have a contract. If the deadline passes with no acceptance, the offer is dead and your deposit comes back.

If you change your mind before the seller signs, act in minutes, not hours. Tell your agent in writing, and call a real estate lawyer about whether a withdrawal is effective in your case. Do not assume you can pull an offer just because the seller has not replied yet.

How do conditions let a buyer walk away?

Conditions are the main exit a resale buyer has. RECO, Ontario’s real estate regulator, suggests buyers make offers conditional where possible on mortgage financing, a home inspection, the sale of their existing home, or other factors that matter to them. Each condition has a deadline. If a true condition is not met or waived by that deadline, the deal ends on the terms written in the clause, and the deposit is usually returned.

Three points trip buyers up:

The deadline is strict. Read my guide on how long a conditional offer lasts.
The wording matters. A vague clause can be argued over. See financing condition wording that actually protects you.
A pre-approval is not a financing condition. RECO notes that pre-qualifying for a mortgage does not remove the need for a financing condition.

RECO also warns that in a competing offer situation it is tempting to drop conditions such as an inspection, and that buyers should think twice before doing so. Once you waive them, the deal is firm.

Is there a cooling-off period in Ontario in 2027?

Only for some new homes. Here is where things stand as of November 2026:

Resale homes and resale condos: none. Ontario’s government confirms there is no legislated cooling-off period. My post on why there is no cooling-off period on a resale home explains why conditions do that job instead.
New or pre-construction condos bought from the developer: yes. Under section 73 of the Condominium Act, 1998, you can rescind by written notice that the developer or its lawyer receives within 10 days of the latest of: receiving the disclosure statement, receiving the condominium guide, and receiving the agreement signed by both sides. The developer must promptly refund your money with interest, without penalty.
New freehold homes from a builder: not yet. Tarion says the Ministry moved the start of the 10-day cooling-off period for new freehold homes to 1 January 2028. A freehold purchase signed in 2027 does not get it.

Free tool — what can you actually afford?

Why is backing out a bigger risk for 2027 buyers?

Two things moved against buyers in late 2026: borrowing costs and prices.

Rates went up. The Bank of Canada raised its policy rate to 2.50% on 28 October 2026, its first increase in more than three years, and said a further increase could be needed. Its next decision is on 9 December 2026. Banks raised prime to 4.70%. Because lenders test you at your contract rate plus 2 points (or 5.25%, whichever is higher), even a small rate rise between your offer and your mortgage approval can shrink what a lender will lend. A firm deal does not wait for your approval to catch up.

Prices came down. If a buyer fails to close and the seller has to resell, a lower resale price becomes part of the seller’s loss. Here is how much typical prices fell in the first ten months of 2026:

Area and home type	Median Jan to Oct 2025	Median Jan to Oct 2026	Change
Brampton detached	$1,042,750	$950,000	-8.9%
Markham detached	$1,518,000	$1,420,000	-6.5%
Mississauga detached	$1,300,000	$1,225,000	-5.8%
Vaughan detached	$1,490,000	$1,415,000	-5.0%
Mississauga condo apartment	$535,000	$485,000	-9.3%
Toronto C01 (downtown) condo apartment	$642,650	$600,000	-6.6%

Source: TRREB MLS data via REALM, January to October 2026 vs the same period of 2025. Median sold prices at municipality or TRREB district level (C01 = downtown Toronto).

Lower prices also raise the chance that a lender’s appraisal comes in under your price, leaving a gap you must fill in cash. My guide to a low appraisal and financing shortfall covers that case.

What happens if a buyer backs out of a firm deal in Ontario?

The seller will usually claim the deposit, and can sue for losses beyond it. Ontario legal guidance lists the kinds of losses a seller may claim: the lost chance to sell to someone else, extra carrying and moving costs, and losses on a home the seller was buying. A court can, in rare cases, even order the buyer to complete the purchase.

The deposit itself does not move on its own. RECO says that when buyer and seller disagree about a deposit held in a brokerage trust account, the brokerage can only release it under a mutual release signed by both, or a court order. If no one sorts it out within two years, the deposit is transferred to RECO, which holds it in trust.

A simple illustration of why this gets expensive: a buyer agrees to pay $1,000,000 with a $50,000 deposit and then cannot close. The seller relists and sells for 5% less, at $950,000. The price gap alone is $50,000, before the seller’s extra mortgage, tax, legal and moving costs. The seller may keep the deposit and pursue the buyer for the rest. This is an illustration only; what a court awards depends on the facts. For the seller’s side of the same story, see when a buyer does not close.

Can the seller back out of an accepted offer?

No more than the buyer can. Once an agreement is firm, the seller is bound too. If a seller refuses to close, the buyer’s options include suing for damages, and in some cases asking a court to order the sale to go ahead. Speak to your lawyer right away, and do not stop working on your financing in the meantime.

How do you get out of a firm deal with the least damage?

If you already know you cannot close, speed helps. My practical order of steps:

Call a real estate lawyer the same day. Bring the agreement, every amendment and your lender’s letters.
Try to close another way first. Another lender, a co-signer or a family gift may cost less than a lawsuit.
Ask for more time. A seller may agree to a later closing in exchange for something, if both sides sign an amendment.
Negotiate a mutual release. Both sides sign, and the deposit is split or kept on agreed terms. Never sign anything without your lawyer.

My take

In a market where rates can rise between offer and closing, I would not let a client waive financing unless their lender has fully approved the specific property, or they have enough cash to close if the lender changes its mind. Run your numbers at a rate at least half a point higher than today’s before you firm up, and keep a cash cushion for an appraisal gap. Being careful at the offer stage is far cheaper than any way out afterwards.

Watch out

Walking away from a firm deal does not end with losing the deposit. The seller can sue for the rest of their loss, and in a falling market that can be larger than the deposit. Do not stop paying attention to the closing date or tell the seller you are “out” without a lawyer’s advice; what you say can be used against you.

What to do next

Before you offer, get a full mortgage approval where possible, not only a pre-approval, and test your budget at a higher rate.
Keep financing and inspection conditions in your offer unless you can truly afford to close without them.
Diarize every condition deadline and the closing date the day the offer is accepted.
Buying a new condo from a developer? Track the 10-day rescission period from the latest of the three documents.
If something goes wrong, call your lawyer the same day.

Need help with this? Talk to me.

I’m Jatin Dua, Broker of Record at RE/MAX Quantum Realty, and I’m the best agent to do this kind of work for you in Toronto and across the GTA. Over $100 million in GTA sales and 100+ families helped sell. Feel free to contact me any time: call or text 833-330-1925 or email [email protected].

Book a free call Call 833-330-1925

Frequently asked questions

Can you back out of an accepted offer on a house in Ontario?

Only if your agreement or a specific law allows it. In Ontario you can usually exit if a condition, such as financing or inspection, is not met by its deadline, or within 10 days on a new condo bought from a developer. Resale homes have no cooling-off period, so walking away from a firm deal risks your deposit and a lawsuit.

Is there a cooling-off period when buying a house in Ontario in 2027?

Not for resale homes. Ontario’s government says resale purchases have no legislated cooling-off period. For new freehold homes, Tarion says the 10-day cooling-off period now starts on 1 January 2028, so 2027 purchases do not get it. Only new condos bought from the developer have a 10-day rescission right under the Condominium Act.

What happens if a buyer backs out of a house sale in Ontario?

If the deal was firm, the Ontario seller will usually claim the deposit and can sue for further losses, such as a lower resale price, carrying costs and moving costs. RECO says a disputed deposit held by a brokerage can only be released by a mutual release signed by both sides or by a court order.

Do you lose your deposit if you back out of a firm deal in Ontario?

Usually yes, and possibly more. In Ontario, a buyer who fails to close a firm deal is generally in breach, and the seller can claim the deposit and sue for losses above it. The brokerage cannot simply hand the deposit to either side; it needs both parties’ signed release or a court order.

Can I cancel my offer to purchase before it is accepted in Ontario?

Possibly, but act fast and get legal advice. Ontario offers set an irrevocable time, the deadline for the seller to accept, and are generally treated as open until then. If the seller accepts first, you have a contract. If the deadline passes without acceptance, the offer ends and your deposit is returned.

Can a seller back out of an accepted offer in Ontario?

Not once the agreement is firm. In Ontario a seller who refuses to close a firm deal is in breach, and the buyer can sue for damages and, in some cases, ask a court to order the sale to proceed. A seller can only exit through the agreement’s own terms or a mutual release signed by both sides.

How long do you have to cancel a new condo purchase in Ontario?

Ten days. Under section 73 of Ontario’s Condominium Act, a buyer from a developer can rescind by written notice the developer or its lawyer receives within 10 days of the latest of three dates: receiving the disclosure statement, the condominium guide, or the signed agreement. The developer must refund your money with interest.

What if my mortgage falls through after I firm up the deal in Ontario?

You are still bound to close. If your Ontario deal is firm and your lender declines or approves less, you must find the money another way, such as another lender, a co-signer or a family gift. If you cannot, you risk your deposit and a claim for the seller’s losses. Call a real estate lawyer immediately.

Can you back out of an accepted offer because rates went up in 2027?

No. A rise in interest rates is not a legal reason to walk away from a firm Ontario purchase. Only an unmet condition, such as financing before its deadline, or a mutual release lets you out. The Bank of Canada raised its rate to 2.50% in October 2026, so test your budget at a higher rate before firming up.

Sources

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