Deposit Clauses in Ontario: Upon Acceptance, Herewith and the 24-Hour Trap

Last updated 11 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · For Ontario registrants · 10 min read

The deposit clause that fails on a long weekend

An offer is accepted at 9:40 p.m. on the Friday of a long weekend. The deposit is payable upon acceptance. The buyer’s funds sit at an institution whose branches do not open again until Tuesday, and no certified cheque or draft can be produced before then. By Tuesday morning your buyer is outside the contractual window, and a listing side holding a backup offer they liked better now has a decision to make.

Nobody in that story did anything wicked. The agent picked a delivery option without asking one question about where the money physically is. That is the deposit failure mode in Ontario, and it is far more common than the dramatic version where a buyer walks away and forfeits.

The two clocks, and which one is your problem

The contractual clock lives in the agreement. OREA’s standard form offers three ways to handle the deposit: herewith, meaning it goes with the offer; upon acceptance, which the form defines as delivery to the deposit holder within 24 hours of acceptance; or as otherwise described in Schedule A, which is where a real deadline goes when 24 hours will not work. Those are different promises, and your buyer is bound by the one you selected.

The regulatory clock lives in the trust rules and belongs to the brokerage, not to your buyer. Trust money received by a brokerage has to be deposited into its real estate trust account within five business days, with weekends and statutory holidays excluded from the count. A buyer who delivers a draft on time has met the contract regardless of when the brokerage banks it, and a brokerage that banks late has a compliance problem regardless of how prompt the buyer was.

Keep them separate. I have refereed the argument where a listing agent insists the deposit is late because it has not cleared and a buyer’s agent insists it is fine because “we have five days.” Both are wrong about the other’s clock.

Supplementary deposits create deadlines that courts enforce

DEP/PAY-3, DEP/PAY-4 and DEP/PAY-5 are useful clauses and dangerous ones, because each of them manufactures a new hard deadline after acceptance — a moment when your buyer must produce money or be in default. Agents write them casually. Courts do not read them casually.

Two Court of Appeal decisions make the point better than I can. In 3 Gill Homes Inc. v. 5009796 Ontario Inc. (Kassar Homes), 2024 ONCA 6, as reported, a termination was upheld over a payment that was 35 minutes late. In Correa v. Valstar Homes (Oakville Sixth Line) Inc., 2025 ONCA 156, as reported, nine minutes was enough to justify termination. Those are builder files with their own features, and the outcome always depends on the agreement and the conduct — but if you are writing a supplementary deposit deadline on the assumption that a short delay will be forgiven, read those two first.

There is a counterweight. In More v. 1362279 Ontario Ltd. (Seiko Homes), 2023 ONCA 527, as reported, a seller who was not ready, willing and able could not rely on time being of the essence, and pouncing on a trivial delay was treated as unreasonable; in 2511899 Ontario Inc. v. 2221465 Ontario Inc., 2024 ONSC 4159, where neither party was ready, neither could rely on the clause. Strict deadlines usually bind and sometimes do not. Draft as though they bind.

Interest: DEP/PAY-6 through DEP/PAY-9

The default in the standard form is that the deposit earns nothing for anyone — it sits in a non-interest-bearing real estate trust account unless the parties agree otherwise. The interest clauses are how you change that, and they are genuinely different from each other. DEP/PAY-6 directs all interest earned to a named party. DEP/PAY-7 pays a lower agreed rate and lets the deposit holder retain the spread. DEP/PAY-8 pays interest only if the amount earned clears a stated threshold. DEP/PAY-9 moves the money into an interest-bearing security with accrued interest going to the buyer, and deals with what happens if the closing is advanced or the deal terminates before maturity.

On a six-figure deposit over a long closing this is real money, and on a 45-day residential closing it is usually not worth the friction. What agents miss is the administration. If interest is payable, the deposit holder has disclosure obligations under TRESA to satisfy, and in practice will need tax information — a social insurance number is commonly required — before it can pay anything out. Raise that with your client before they sign a clause that obliges them to hand over personal information to the other side’s brokerage.

One more drafting point: DEP/PAY-7 and DEP/PAY-8 both let the deposit holder keep part or all of the interest. If your brokerage is the deposit holder and you are recommending that clause, disclose it plainly rather than explaining it afterwards.

How the money actually moves: cheques, EFT and the balance

DEP/PAY-10 exists because a negotiable cheque is no longer how most buyers want to move a deposit. It permits electronic funds transfer to an account the deposit holder designates, at a stated party’s expense, and requires the buyer to provide the identifying information the deposit holder needs — institution, transit, account, confirmation of the transfer — so the brokerage can satisfy its obligations under TRESA and the other rules that apply to receiving money.

Use it carefully. Wire and EFT instructions are the most impersonated document in this business. My standing rule: banking details are never confirmed by replying to the email that carried them. The buyer’s agent calls the brokerage on a number they already had, confirms verbally, and sends a small test transfer where the timeline allows. That is a habit, not a rule I am citing — and it has saved deposits.

DEP/PAY-1 and DEP/PAY-2 handle the other end — the further sum or balance of price on completion, drawn on a lawyer’s trust account by draft, certified cheque or high-value wire. That is closing-day work for the lawyers, but it tells you something useful: a buyer whose money is locked in a product maturing the week after closing has a problem nobody discovers until it is too late.

Getting the money back out is harder than putting it in

This is the part of deposit practice agents understand least, and it causes more client anger than anything else in the file. When a condition is not satisfied the agreement ends, but the deposit does not move. A brokerage may disburse trust money only on a written direction signed by all parties to the agreement, or on a court order. Those are the only two routes, they are either-or, and the brokerage has no discretion to pick a side.

A formal mutual release is not strictly required; the written direction is. The OREA mutual release happens to contain one, which is why everyone treats the release as the mechanism. The brokerage’s own signature is needed on neither. Say this to a buyer on day one and you prevent the call where they accuse your brokerage of holding their money hostage.

If the seller refuses to sign, the argument moves to forfeiture, which is legal territory and belongs to the client’s lawyer. What I will tell you is what not to say. Do not tell a client a particular deposit size is safe. Relief from forfeiture, as described in Redstone Enterprises Ltd. v. Simple Technology Inc., 2017 ONCA 282, requires the sum to be out of all proportion to the damages and the forfeiture to be unconscionable — a comparative test against the seller’s actual loss, not a fixed percentage. Anyone quoting you a safe percentage is making it up.

And on waivers: in 1854329 Ontario Inc. v. Cairo, 2022 ONCA 744, as reported, a buyer waived a financing condition on the strength of a non-binding term sheet, the funding did not materialise, the deposit was forfeited and relief was refused. A term sheet is not a commitment letter. If your buyer is about to waive financing, that case is the conversation, and it is covered further in my post on financing condition wording.

What happens behind the counter, and why it affects you

Agents rarely see the trust side, and it shapes how fast your client gets answers. Brokerage trust accounts are reconciled monthly, within 30 days of the bank statement, and the reconciliation is reviewed, signed and dated by the Broker of Record. Shortfalls have to be reported to RECO immediately and restored, with a narrow exception for bank service fees, which are eliminated as soon as they are discovered. Money that has sat unclaimed for more than two years with no way to determine entitlement goes to RECO, though very small amounts need not.

Records matter too: trade documents are kept for at least six years, and written offers that were never accepted for at least one year. That is why your administrator wants the transmission record and the signed direction and not just a screenshot. It is also why “we will sort the deposit out later” is not a thing a brokerage can agree to.

Consumer deposit protection administered through RECO exists for the scenario nobody wants to discuss. Coverage limits have changed and I will not quote a figure that may be out of date — confirm current limits with RECO before telling a client anything about them.

Your exposure, and how I run a deposit

Three things put the drafting registrant on the hook: writing “herewith” when no cheque exists, which is a representation about a fact you did not check; selecting upon acceptance without asking where the money is; and telling a client a deposit is safe, forfeited or recoverable, all of which are legal conclusions. If the listing side is a self-represented seller, add a fourth — RECO’s guidance is that a brokerage must not agree with a self-represented seller to provide assistance or to charge or collect remuneration, so who holds the deposit is a question for your Broker of Record before the offer goes out.

1. Ask where the funds are and what form they can take before you draft.
2. If the 24-hour window will not work, say so in Schedule A with a date, a time and a method. Do not rely on goodwill.
3. Name the deposit holder accurately and confirm it will accept the delivery method you propose.
4. Calendar every deposit date — initial and supplementary — the day the offer is accepted, with a reminder the business day before.
5. Confirm EFT instructions by voice on a number you already had. Never from the email.
6. If a condition is not going to be met, give notice in the form the agreement requires and start the written direction for the deposit the same day.
7. Put the two-clock explanation in your buyer package. Three sentences, and it prevents the worst conversation in the file.

Pull the current DEP/PAY wording from your own OREA member copy before you use any of these clauses. The codes are the index; the text in your copy is what your client signs.

Questions agents actually ask

Related reading

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• Insurance Conditions in Ontario: The Condition More Buyers Should Be Using
• Financing Conditions in Ontario: The Wording, the Timeline and the Case That Should Scare You
• Soil Test Conditions in Ontario: Drafting Access Before You Own the Land
• Vermiculite and Asbestos Clauses in Ontario: Testing, Corrective Action and the Warranty
• Every clause and condition guide in one place

This is professional commentary from a Broker of Record on Ontario deposit drafting and trust practice, not legal advice. Whether a deposit is forfeited, recoverable, or subject to relief from forfeiture is a question for the client’s lawyer, and brokerage trust procedures vary. This is general professional commentary from a Broker of Record on drafting practice. It is not legal advice, it is not a substitute for your own brokerage’s policies, and it does not create any professional relationship. Clause codes refer to OREA’s Guidelines for Residential and Commercial Clauses, an OREA member resource — the clause wording itself is OREA’s and is not reproduced here. Always work from your brokerage’s approved forms, and send your client to a lawyer for anything turning on interpretation, enforceability or remedy. Legislation, regulator guidance and case law all change; verify anything you are relying on.