An individual sold his residential property located in Etobicoke. The buyer put down a $10,000.00 deposit at the time of entering into the Agreement of Purchase and Sale. On the day of closing, the buyer was not able to close and the sale did not go through. At law, the buyer would forfeit his $10,000.00 deposit to the seller for his breach of the agreement. However, the buyer refused to agree to allow the real estate brokerage firm which was holding the $10,000.00 in trust to pay it to the seller. The seller retained me to obtain the $10,000.00 deposit money for him.


In order to obtain the $10,000.00 deposit money for the seller, who was now my client, I issued a Plaintiff’s Claim in the small claims court against the buyer who had defaulted and the brokerage firm as a stake-holder because the brokerage firm was holding the $10,000.00 in trust.

The buyer had moved to another country. After obtaining his telephone number, I called and spoke with the buyer and obtained his new, out-of-country address. I was then able to serve him with the Claim pursuant to the small claims court rules. I also served the real estate brokerage firm with the Claim.

Neither party filed a defence. Accordingly, at the appropriate time, I attended before a judge and obtained a judgment against both parties jointly – $11,500.00 against the purchaser and $10,000.00 against the real estate company.

I provided the Judge’s Order to the real estate company and promptly received payment of $10,000.00 from the brokerage for my client. Because the buyer was no longer in the country, my client elected not to pursue him for the difference of $1,500.00 that he still owed on the judgment.


There are two important takeaways from this matter:

  • Just because the seller is entitled at law to obtain the deposit paid by the buyer at the time of purchase where the buyer defaults on the closing, obtaining the deposit money is not automatic. Where the buyer refuses to consent to giving the seller that deposit money, or where a settlement cannot be reached between the buyer and seller with regard to the deposit money, it will be necessary to sue to obtain the deposit.


  • Just because the buyer may have moved out of the province, or even out of the country, it is still possible to successfully proceed against him or her for the deposit monies if you are entitled to them at law.