How a seller of a home can obtain the deposit monies that were paid by a purchaser when that purchaser breached the Agreement of Purchase and Sale by not being able to finalize the purchase of the home on the closing date.


My client sold her home but the purchaser was unable to close the transaction on the scheduled closing date. My client provided three extensions to enable the purchasers to obtain their financing but, ultimately, they still could not complete the purchase and, as such, they breached the Agreement of Purchase and Sale contract. Because of the purchasers’ breach, my client was entitled to receive the deposit of $5,000.00 that the purchasers had provided to the real estate firm at the time of entering into the purchase agreement. Not only did the purchasers not agree to the forfeiture of their $5,000.00 deposit money to be paid to the seller, the purchasers actually sued my client for the return of their deposit. It was at that point that the seller retained me to defend against the small claims court claim brought against her and to represent her in court.


I prepared and served a defence on the purchasers. As well, I issued a Defendant’s Claim against the purchasers to obtain the $5,000.00 deposit for my client. Ultimately, because of the defence that I filed and the Defendant’s Claim that I issued, the matter settled when my client agreed to give the purchasers $750.00 back from their $5,000.00 deposit and my client would receive $4,250.00. As a result, the matter was completed without the need for a trial. My client was pleased with the settlement that I was able to achieve without a trial, especially since she resold the home for $5,500.00 more than the original defaulting purchaser was going to pay.


There are two takeaways from this matter:

  • Obtain as large a deposit as you can get when selling your home - as long as the amount of the deposit is within 10 or 15 percent of the purchase price of your home, with limited exceptions, you are entitled to receive all of those deposit monies if the purchaser breaches the Agreement of Purchase and Sale by not being able to complete the purchase on the closing date.
  • If the purchaser sues you (the seller) for the deposit monies that you are entitled to receive because the purchaser defaulted on the closing as happened in this case, you must defend and issue a Defendant’s Claim so that you, not the defaulting purchaser, can obtain the deposit money