Buyer Missed the Deposit. Now What?

Reading Time: 4 minutes

Let's start with a scenario:

You’ve got a signed Agreement of Purchase and Sale (APS). The deposit is due within 24 hours of acceptance.

But the deposit deadline comes…

No cheque. No wire. No transfer.

Now what?

Is the deal dead? Is it in limbo? Can either party just walk away?

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First Things First: The Contract is Binding.

A common misconception is:

“if the deposit wasn’t paid there is no binding agreement”.

That's wrong.

Once both parties have signed the APS, it’s a valid and enforceable contract — even if the deposit hasn’t been delivered.

The deposit is a term of the contract, and not paying it is a breach of that contract.

And when there's a fundamental breach like this, the seller has options:

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Option 1: Extend the deposit deadline.

If the seller still wants the deal they can choose to extend the deposit deadline.

Maybe they believe the buyer is acting in good faith but just needs more time.

This should always be done in writing, with clear terms agreed to by both parties.

Option 2: Terminate the Agreement

The seller can also choose to terminate the APS because of the buyer’s breach. This effectively unwinds the contract and releases both parties from their obligations.

But a word of caution:
Terminating the deal might limit the seller’s right to claim damages. According to case law, a seller is typically entitled to keep the deposit even if no financial loss occurred — so giving up the agreement too quickly might mean walking away from money on the table.

Option 3: Sue for Damages

If the buyer doesn’t deliver the deposit, the seller may be entitled to sue for damages.

In many cases, courts will award the full deposit amount, regardless of whether the seller suffered an actual loss.

If there is a loss — say the property ends up selling for less — the seller can seek additional compensation. That might include:

• The difference between the original sale price and the resale price
• Carrying costs
• Legal fees
• Any other costs associated with re-listing or re-selling the property

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So what’s this mean for you?

When a buyer fails to pay the deposit, it’s a breach of the APS — not a “deal that never was.”

The seller has options:

• Extend the deadline
• Terminate the agreement
• Pursue legal action

Each choice has consequences, and there’s no one-size-fits-all answer.

👉 As a Realtor, your role isn’t to give legal advice.

Your job is to make sure your clients speak to a real estate lawyer — and to help guide them toward that next best step.