Real Estate Deposits in BC: What Buyers Need to Know

When buying a home in British Columbia, the deposit is one of the most important parts of the offer. It shows the seller that the buyer is committed to completing the purchase—but it can also place a significant amount of the buyer’s money at risk.

Before writing an offer, buyers should understand how much deposit may be expected, when it is due, who holds it, and what can happen if the transaction does not complete.

What Is a Real Estate Deposit?

A deposit is money the buyer agrees to provide under the Contract of Purchase and Sale. It is evidence of the buyer’s commitment to the transaction and may provide the seller with financial protection if the buyer later breaches a firm contract.

A deposit is not legally required to create every binding real estate contract, but it is customary in most BC resale transactions. The amount, timing, payment method, and deposit holder should be clearly written into the contract.

How Much Is a Typical Deposit in BC?

There is no single deposit amount required by BC law. According to BC Financial Services Authority consumer guidance, five to 10 per cent of the purchase price is typical, but any amount may be negotiated between the buyer and seller.

The appropriate amount can depend on:

• The purchase price

• Local market conditions and competing offers

• The type of property

• The seller’s expectations

• The buyer’s available funds and risk tolerance

• The terms and timing of the offer

A larger deposit may make an offer appear stronger, but it also puts more of the buyer’s money at risk if a dispute or default occurs. Buyers should never offer a deposit they cannot deliver by the contractual deadline.

Read BCFSA’s Consumer Guide to Deposits

When Is the Deposit Due?

The contract determines when the deposit must be paid. Common arrangements include:

• With the offer

• Immediately or within a stated period after acceptance

• After the buyer removes their subject conditions

Do not assume the deposit is automatically due after subject removal. Read the exact wording of the contract. A deadline described as “within 24 hours” may operate differently from one described using business days or a specific date and time.

The buyer should arrange access to the funds before making the offer. Transfers between banks, investment withdrawals, gifted funds, bank drafts, and wire transfers can take time.

Who Holds the Deposit?

In many BC transactions, the deposit is placed into a real estate brokerage’s trust account. The brokerage holds the money as a stakeholder—a neutral holder rather than as money belonging solely to the buyer or seller.

BCFSA recommends ensuring that the deposit is held in trust and requesting a receipt. A real estate professional cannot personally hold the buyer’s deposit. If the contract names a lawyer, notary, developer, seller, or another party as the holder, buyers should obtain appropriate advice about the arrangement and risks.

Does the Deposit Form Part of the Down Payment?

Yes. If the purchase completes, the deposit is credited toward the buyer’s total required funds. For example, if a buyer needs a $100,000 down payment and has already paid a $40,000 deposit, the deposit normally forms part of that $100,000. The buyer would arrange the remaining down payment and closing funds through their lawyer or notary.

The deposit and down payment are related, but they are not the same:

• Deposit: paid according to the offer terms as security for the transaction

• Down payment: the total portion of the purchase price that is not financed by the mortgage

What Happens to the Deposit When Subjects Are Not Removed?

If the contract contains subject conditions for the buyer and the buyer does not remove them by the deadline, the transaction may not proceed. However, a brokerage holding the deposit as stakeholder generally cannot simply return it based only on one party’s request.

Except in situations covered by the Home Buyer Rescission Period rules, both buyer and seller will commonly need to sign a written release directing the brokerage how to handle the deposit. If the parties disagree, the brokerage may have to continue holding the money while the parties obtain legal advice or a court determines entitlement.

This is one reason buyers must act honestly, reasonably, and in good faith when working to satisfy subject conditions. The exact wording of each condition matters.

Can a Buyer Lose the Deposit?

Yes. Once a contract is firm, a buyer who fails to complete may be in breach of contract and could risk losing the deposit. The seller may also seek additional damages if the seller’s losses exceed the deposit—for example, if the property later sells for less and the seller incurs added carrying or legal costs.

A financing problem, change in personal circumstances, relationship breakdown, or buyer’s remorse does not automatically release a buyer from a firm contract. Buyers should remove financing and other conditions only after completing appropriate due diligence and receiving the necessary professional advice.

Whether a seller is legally entitled to a deposit depends on the contract and circumstances. If a transaction is at risk of collapsing, both parties should promptly obtain independent legal advice.

BC Home Buyer Rescission Period

For many residential purchases in BC, buyers have a statutory three-business-day rescission period after an offer is accepted. The right generally cannot be waived, although certain property types and transactions are exempt.

A buyer who properly exercises this right must notify the seller in writing before the deadline and pay a rescission fee equal to 0.25% of the purchase price. On a $1,000,000 purchase, the fee would be $2,500.

If a brokerage is holding a deposit, the rescission fee is paid to the seller from the deposit and the remaining amount is returned to the buyer. The rescission period is separate from any subject conditions written into the contract.

Review BCFSA’s Home Buyer Rescission Period information

What About Deposits on Presale Homes?

Presale contracts commonly require an initial deposit followed by one or more additional deposits on a schedule. These deposits can be substantial and the contract may include different cancellation, assignment, financing, and completion provisions from a resale purchase.

BC purchasers of qualifying development units generally receive a seven-day cancellation right under the Real Estate Development Marketing Act after the later of signing the purchase agreement and acknowledging receipt of the disclosure statement. This is different from the resale Home Buyer Rescission Period.

Buyers should have a presale contract and disclosure statement reviewed by an experienced real estate lawyer before the cancellation deadline expires.

Deposit Checklist for BC Buyers

• Confirm the exact deposit amount before making the offer

• Know the due date, time, payment method, and named deposit holder

• Make sure the funds are liquid and transferable

• Ask whether your bank has transfer or withdrawal limits

• Keep proof of payment and request a receipt

• Understand every subject condition and deadline

• Do not remove subjects until your due diligence is complete

• Obtain legal advice immediately if the transaction may not complete

Buying a Home in South Surrey, White Rock, or Langley?

I help buyers understand the offer process, plan deposit timing, review important dates and conditions, and coordinate with mortgage and legal professionals. If you are preparing to buy in South Surrey, White Rock, Langley, Cloverdale, Surrey, or elsewhere in the Lower Mainland, I would be happy to help you create a clear purchasing plan.

Ilona Crane, REALTOR®
Royal LePage Wolstencroft Realty
Cell: 604-377-9209
Email: soldbyilona@gmail.com
Website: soldbyilona.com

This article provides general information only and is not legal or financial advice. Deposit rights and obligations depend on the wording of the contract and the specific circumstances. Buyers and sellers should obtain independent legal advice when a deposit dispute, default, rescission, or collapsing transaction may arise.