Depending on the circumstances, in some cases you may be able to get your deposit back, or at least part of it, even if you are unable to complete your house purchase on the scheduled day of closing.


Prior to becoming my clients, a husband and wife purchased a home and provided a $15,000.00 deposit. Unfortunately, they were unable to obtain the required financing. As a result, they were unable to complete the home purchase on the closing date. The law sets out that if the purchasers breach the ‘Agreement of Purchase and Sale’, which these purchasers did, they lose the good-faith deposit money that they paid.

In this case, the purchasers and sellers negotiated a settlement between themselves whereby the sellers kept $11,000.00 of the deposit monies and the purchasers recovered only $4,000.00 of their $15,000.00 deposit.
At this point, the purchasers came to me with regard to obtaining the remaining $11,000.00


The purchasers (now my clients) told me that their sales agent had told them to waive the financing condition and to go in firm because he could get them financed. It turned out that he could not and as a result of his negligent and false representation, they lost the house and $11,000.00 of their deposit money.

In order to recover their $11,000.00 loss, I issued a Plaintiff’s Claim in small claims court against the sales agent and the real estate brokerage for the principal sum of $11,000.00 plus costs and interest. The two Defendants filed a defence claiming that the purchasers were aware of the risks and chose to go in firm so that they would not lose the house. Previously, they had made offers on at least four other houses and lost each offer partly because there were other offers made by other people also bidding to buy the same house.

Rather than go to trial where one of the parties would either win everything or lose everything, the matter settled whereby my clients agreed to accept $7,000.00 of the $11,000.00 that they were claiming.

This was not a perfect outcome but given the risk of losing that my clients faced at a trial, and the potential high cost of a trial, and the risk of having to pay court costs to the other side if they did lose at trial, the settlement was a good one.


There are three takeaways from this matter:

  • Don’t waive the finance conditioning unless you are sure that you will be able to obtain financing.
  • If your real estate agent promises that he can get you financed, make sure that he puts that commitment in writing.
  • Have your financing in place and prearranged ahead of making an offer to purchase so that you will not default on the day of closing due to not being able to obtain financing