What Happens to Your Deposit If a BC Home Deal Falls Apart

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Most buyers think of the deposit as their own money, parked somewhere safe, ready to come back if the sale does not complete. In British Columbia that is not how it works.

The moment your deposit reaches a real estate brokerage’s trust account, the brokerage stops acting for you. It holds the money for both sides at once. It cannot hand it back because you asked, because your subject was never removed, or even because your contract says you are entitled to it.

There are only a few ways that money comes out again, and most of them need the other side’s signature or a judge. This page sets out what those ways are, what each one costs, how long each one takes, and the two places where the regulator’s own pages do not agree with each other.

Where your deposit actually goes

Into a trust account, almost always, and almost always the buyer’s brokerage. The Real Estate Services Act says an agent who receives money must “promptly pay or deliver to the brokerage” all money received on behalf of a client, and that the brokerage “must promptly pay into a brokerage trust account”. Those are sections 27 (1) and 27 (2).

Note the word. Promptly. I looked for a number of days across the Act, the Real Estate Services Rules and the two regulations that touch deposits, and there is no number anywhere. Any deadline you are given for paying a deposit comes from your contract, not from the law.

Section 26 requires the account to be interest bearing and held “with one or more savings institutions in British Columbia”.

Who holds it is negotiable. The BC Financial Services Authority, the regulator, tells buyers that “who holds the deposit can be negotiated between the buyer and seller” and that “In most cases, the brokerage (agency) representing the buyer will hold the buyer’s deposit until the deal completes”. It adds that whoever holds it, “you should request a receipt from the holder of the deposit”.

There is also a quiet exit from the whole system. Section 27 (4) lets all the principals agree, in a written agreement separate from the contract of purchase and sale, that the money does not go into a brokerage trust account at all, subject to conditions in the Rules. If you are asked to sign something like that, read it with a lawyer first. A deposit outside a brokerage trust account is outside everything else on this page.

There is no legal deposit percentage

BCFSA’s consumer page says “While five to 10 per cent of the purchase price is typical for a deposit, any amount can be negotiated between a buyer and seller.” Its guideline for agents is blunter: “Many consumers believe that there is a standard percentage of an offer price that must be provided as a deposit when entering into a purchase of a property. You should explain to your client that there is no set amount that must be provided.”

Both sentences come from the same regulator. Treat the first as a description of habit and the second as the rule.

The brokerage is not on your side, and that is the law

Section 28 (2) of the Act is the sentence that decides most of what follows. Once the money is in the trust account, “despite any rule of law to the contrary, the brokerage holds that money as a stakeholder and not as agent for one of the parties to the trade in real estate”. That lasts “unless or until the parties agree otherwise in writing”.

The regulator puts it in plainer words. “All deposits held by a brokerage in respect of a purchase or sale of real estate are held as stakeholder,” says the BCFSA Deposits Guidelines, and “the funds are held for the benefit of both parties and not for one party or the other.”

Your own agent’s brokerage may be holding your money. It is still not holding it for you.

The only ways a deposit comes out of trust

Section 30 (2) of the Act is a closed list, and it uses the word “only”. Money the brokerage holds as a stakeholder “may be withdrawn only” as provided in subsection (1) (a) to (f), or “in accordance with a written agreement of the parties to the trade in real estate”, or under the regulations.

The detail that matters sits in what was left out. Ordinary trust money, under section 30 (1) (g), can be paid out “to or in accordance with the instructions of the principal to whose credit the money was deposited”. Stakeholder money borrows paragraphs (a) to (f) and stops. Paragraph (g) is deliberately excluded. That one missing letter is why your instructions alone cannot free your own deposit.

Route out	What has to happen first	Who can start it	Where it comes from
A signed release	Every party to the contract signs an agreement saying where the money goes	Either side can ask. Both have to sign	Act, s. 30 (2) (b)
A court order	A judge decides who is entitled and orders payment	Either side, by suing	Act, s. 30 (1) (f)
Paid into court	The brokerage applies to the Supreme Court and hands the money to the court	Only the brokerage. It may, it does not have to	Act, s. 33 (1)
Rescission payout	The buyer rescinds in the first three business days under the Property Law Act	The buyer, alone. No release form	Rescission regulation, s. 6 (3)
Paid in by mistake	The money should never have been in that account	The brokerage	Act, s. 30 (1) (a)
Unclaimed after a year	Reasonable efforts to find the owner fail and the money sits unclaimed for more than one year	The brokerage, to the Unclaimed Property Act administrator	Act, s. 32 (1)
Your own instructions	Nothing. This route does not exist for a stakeholder deposit	Nobody	s. 30 (1) (g) is left out of s. 30 (2)

One carve-out before you rely on any of that. Section 30 (3) says the section “does not apply to a deposit received by a brokerage under section 18 of the Real Estate Development Marketing Act”. Presale deposits sit outside this list entirely, and have their own section further down this page.

“Entitled to it” is not the same as getting it

This is the point most pages miss, and it is the one that actually costs people money.

Writing for the BC Real Estate Association, lawyer Lisa Niro of Bell Alliance LLP puts the common law position this way in Legally Speaking #524: “Generally speaking, depending on the terms of the contract, an innocent seller is entitled to retain the deposit whether or not they suffered any damages.” The very next sentence is the exception: “The exception to this is in instances where the deposit is so large, that it cannot be considered a deposit anymore.”

Read the whole sentence, not the middle of it. Two qualifiers are doing real work there. Generally speaking, and depending on the terms of the contract. Plenty of pages quote this proposition as a flat rule of BC law. It is not one. It depends on what your contract says.

And even where entitlement is clear, the money does not move. The same article: “even though the innocent party may be entitled to the deposit, if the deposit is being held under the Real Estate Services Act it cannot be released without the consent of both parties, meaning the innocent party may need to obtain a court order for the release of the deposit”.

BCFSA tells buyers the same thing, in the plainest words anyone uses: “even if the contract stipulates that if the deal collapses, you are entitled to the deposit, both parties will need to sign an agreement agreeing to it.” And on its page for buyers: “If your contract contains subject clauses in your favour and you do not remove those clauses, you will not automatically get your deposit back. Both you and the seller will have to sign a separate release form”.

The wording of the contract is what decides

How much the wording matters was settled by a two-word change. In Legally Speaking #462, Brian Taylor of Norton Rose Fulbright LLP describes how “Prior to April 2012, Section 12 of the standard Contract and Purchase and Sale (CPS)” said only that a deposit was “absolutely forfeited”, and how one line of authority read that as forfeiture only where the seller had actually lost money. The standard form was then amended to say the deposit was both “non-refundable” and “absolutely forfeited”. As he puts it, “The addition of the words ‘non-refundable’ adds emphasis to that position.”

The same article sets the ceiling on it: “If the seller has suffered actual damages, the amount of the deposit is applied toward those damages. If the seller has not suffered any actual damages, the amount of the deposit, and no more, is forfeited to the seller.” A forfeited deposit is not a licence to claim anything further unless there are real losses to prove.

A true deposit and a partial payment are not the same thing

This distinction decides whether the other side has to prove they lost anything.

The clearest statement of it in a decision anyone can open for free is Kelly v. Nagy, 2024 BCCRT 70. The tribunal wrote: “In law, a true deposit is designed to motivate contracting parties to carry out their bargains.” And: “A buyer who repudiates the contract generally forfeits the deposit.” Then the other half: “In contrast, a partial payment is made with the intention of completing a transaction”, and “For a seller to keep a partial payment, the seller must prove actual loss to justify keeping the money received”.

Be honest about what that case is. It is a used car, not a house, and the Civil Resolution Tribunal is not a court. But the tribunal is quoting the Court of Appeal: its citation is Tang v. Zhang, 2013 BCCA 52 at paragraph 30. That judgment cannot be opened from here, so I am citing the tribunal’s use of it rather than the judgment itself.

One thing worth flagging. BCREA’s own article prints that citation as 2013 BCCA 54. Three separate tribunal decisions print it as 2013 BCCA 52. If you are searching for it, use the second one.

If the other side will not sign the release

Here is the part nobody tells buyers. Nothing happens.

The brokerage is not obliged to do anything. BCFSA’s guideline for agents says that where there is a dispute, “the funds would have to be retained by the brokerage or the brokerage could make an application to pay the deposit into court”. The Act agrees. Section 33 (1) says that where “there are adverse claimants to the money”, the brokerage “may apply to the Supreme Court for an order for payment of the money into court”.

May. Not must. There is no deadline in section 33 either. A brokerage that does nothing at all is complying with the law, and your money can sit there for a long time while it does.

If the brokerage does apply, two things follow that are worth knowing. The application can be made “without notice to any other person”, and once the money is in court, it “must not be paid out of court except by order of the court”. The court can also order the brokerage’s costs of the application to be paid, and those costs come out of the same pot.

So in a real standoff, the practical question is not who deserves the money. It is who is willing to start a claim.

Forum	Money limit	Fee to start a claim	Fee for a decision	How long
Civil Resolution Tribunal	$5,000, excluding interest and expenses	$75 online, or $100 by email or mail, for claims of $3,000 or less. $125 or $150 above that	$50 for a small claims decision	Average 250 days, median 198 days
Provincial Court, small claims	$35,000	Court fee schedule applies. Not published on the pages used here	Not published on the pages used here	Not published
Supreme Court of BC	No limit. Also the only court that can order a deposit paid into court	Court fee schedule applies. Not published on the pages used here	Not published on the pages used here	Not published

Those tribunal figures are its own. The fees are published on the Civil Resolution Tribunal fees page. The timing comes from the tribunal’s annual report for the year to 31 March 2025, which says in terms: “For small claims disputes closed between April 1, 2024 and March 31, 2025, the average time to resolution was 250 days.” The median was 198 days. The tribunal also allows up to three fee waivers in any twelve-month period for individuals on a low income.

Two practical points about forum. First, a typical home deposit is far above the tribunal’s $5,000 ceiling, so most deposit fights are not tribunal cases at all. Second, the Civil Resolution Tribunal Act does block you from taking a claim within the tribunal’s jurisdiction to court — but section 16.4 (2) says a person may bring “a tribunal small claim” in the Supreme Court “even if none of the circumstances referred to in subsection (1) (a) to (f) have occurred”. The block is on Provincial Court, not on the Supreme Court.

And there is a clock. Under the Limitation Act, section 6 (1), a proceeding “must not be commenced more than two years after the day on which the claim is discovered”.

The regulator does not say the same thing twice

While checking every source for this page I found two places where BCFSA’s consumer guide to deposits and its own guidelines for agents do not match. Both matter to a buyer, so here they are side by side.

The question	What BCFSA tells agents	What BCFSA tells consumers	What the Act says
If we disagree, does the deposit go to court?	“the funds would have to be retained by the brokerage or the brokerage could make an application to pay the deposit into court”	“If there is a disagreement over who gets the funds, the deposit is paid into court, and the court will decide.”	s. 33 (1): the brokerage “may apply”. There is no must, and no deadline
How big does a deposit have to be?	“there is no set amount that must be provided”	“five to 10 per cent of the purchase price is typical”	The Act sets no amount at all

The consumer page is the outlier in both rows. Nothing sends a disputed deposit to court automatically, and no percentage is required. If you have been told either of those things, it did not come from the legislation.

The three-business-day window is a different thing

Since 3 January 2023, a buyer of residential property in BC has had a short right to walk away for any reason at all. It is set out in section 42 of the Property Law Act and in the Home Buyer Rescission Period Regulation, and it is the one route where your deposit moves without anyone else’s signature.

The Act says a purchaser may rescind by serving written notice “within the prescribed number of days after the date that the acceptance of the offer was signed”. The regulation sets the number: “the prescribed number of days is 3 business days”. BCFSA reads that as meaning “Three business days begins the day after acceptance of an offer is signed” — and that reading is the regulator’s, not the statute’s. The statute does not spell it out.

The price of using it is fixed. Section 6 (1): the purchaser “must promptly pay to the seller an amount that is equal to 0.25% of the purchase price”. BCFSA’s worked example: “if the purchase price is $400,000 the rescission fee would equal $1000”.

The deposit mechanics are in section 6 (2). If a deposit was received, “the amount payable under subsection (1) must be paid to the seller from the deposit”, and “after the seller is paid under paragraph (a), the remainder of the deposit must be paid promptly to the purchaser”. Section 6 (3) is what makes that lawful without a release form.

Two things this right does that nothing else on this page does. It cannot be waived — section 7 says so in one line. And it overrides your contract: BCFSA tells managing brokers that “despite what the contract of purchase and sale may stipulate (e.g., a non-refundable deposit)”, the payout follows the regulation.

It does not apply to everything. Section 3 of the regulation exempts property on leased land, a leasehold interest, property sold at auction, and property “sold under a court order or the supervision of a court”. Section 42 (2) of the Act excludes presales governed by the development marketing legislation, and section 42 (3) excludes a transaction where title has already transferred.

The right	How long you have	What it costs you	What happens to the deposit	Can the contract override it?
Home Buyer Rescission Period	Three business days from signed acceptance	0.25% of the purchase price	The fee comes out of the deposit, the rest is returned promptly, with no release form	No. The regulation says it cannot be waived
Presale rescission under the development marketing legislation	Seven days from the later of the agreement and the signed acknowledgment. Not business days	Nothing	Returned in full, promptly, by whoever is holding it	No
An unremoved subject clause in your own contract	Whatever your contract says	Nothing, in principle	Nothing moves until both sides sign a release or a judge orders it	The contract is what creates it, so yes

One gap in the regulation, and I could not close it

Section 6 (1) obliges the buyer to pay the fee. Section 6 (2) only applies “If a deposit was received”. So where no deposit was paid, the buyer owes the seller the 0.25% directly.

Where a deposit was paid but it is smaller than 0.25% of the price, the regulation says nothing about the shortfall. I read it end to end. There is no provision covering it. Any confident answer you see about how that gap is filled is somebody’s inference, including mine, so I have not printed one.

Presales run on a different statute

If you are buying from a developer before the building exists, almost none of the above applies. The Real Estate Development Marketing Act governs instead.

Section 18 (1): a developer who receives a deposit “must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as trustee in a trust account in a savings institution in British Columbia”. Section 18 (2) gives that trustee the same neutrality: it holds the deposit “for the developer and the purchaser and not as an agent for either of them”.

The rescission right is longer and cheaper. Section 21 (2) gives a purchaser “7 days after the later of” the date the purchase agreement was made and the date the developer obtained a signed acknowledgment that the purchaser had an opportunity to read the disclosure statement. Those are seven days, not seven business days. If the right is exercised, section 21 (6) says the person holding the deposit “must promptly return the deposit to the purchaser”. All of it.

The part to read carefully is section 18 (4). A trustee “must release the deposit to the developer if the developer certifies in writing” four things: that the purchaser has no rescission right left, that the purchaser “has failed to pay a subsequent deposit or the balance of the purchase price when required”, that the agreement says the developer may cancel and that the deposit is then “forfeited to the developer”, and that the developer has cancelled.

Those four conditions are the whole point. A developer cannot simply take a presale deposit. But where a buyer has missed a staged deposit or the balance, and the contract contains a forfeiture term, the money can be released to the developer on the developer’s own written certificate, with no court order and no signature from the buyer. That is a real difference from a resale deposit, and it is the reason to read the payment schedule in a presale contract before you sign it.

Who gets the interest

Not you, in the ordinary case. Section 29 (1) of the Real Estate Services Act says a brokerage credited with interest on money in a trust account “holds the interest in trust for the foundation” — the Real Estate Foundation of British Columbia, defined in the Act itself.

There is a way round it, and BCFSA states it precisely: “Unless the contract specifically states that any interest earned on a deposit will be payable to either the seller or the buyer, interest is payable to the Real Estate Foundation of B.C.” That matches sections 29 (3) and 29 (4), which route the interest by the parties’ written agreement where there is one.

On a large deposit held for months, that is worth asking about before you sign, not after.

Decided cases, including the ones the claimant lost

Every page I read on this subject explains the principle. None of them shows what happened to real people who argued it. Here are five decisions of the Civil Resolution Tribunal that I opened and read in full. Four of the five claimants lost.

Decision	What was being bought	Claimed	Awarded	Why it turned out that way
Brind’Amour v. Unger, 2018 BCCRT 519	A house	$5,000, with the seller counterclaiming to keep it	$5,234.32 to the buyer, paid within 30 days. The seller’s counterclaim dismissed	The inspection subject was “for the sole benefit of” the buyer and was never removed. The tribunal added that once the subject was lifted, the money would have been non-refundable
Somel v. Gourley, 2021 BCCRT 324	A vacant residential lot. This was a building-scheme compliance deposit paid at completion, not a purchase deposit	$5,000	$0	The term was ambiguous and the buyers’ own agent had drafted it, so it was read against them
Chu v. Navigator Properties Inc., 2022 BCCRT 1347	Not a purchase at all. A contract to rebuild a house and build a laneway house	$5,000	$0, and the claimant was ordered to pay $50 in tribunal fees	She cancelled the project, which was repudiation, and a true deposit is forfeited on repudiation
Kelly v. Nagy, 2024 BCCRT 70	A used car	$900	$0	The payment was a true deposit, and the buyer walked away
Reinsch v. Willetts, 2024 BCCRT 532	A trailer	$4,000	$0	Same reasoning. A true deposit, forfeited on repudiation

Three of those five are not real estate at all, and I have said so in the table rather than quietly letting them look like house sales. That is the honest position, and it points at something worth knowing: there is almost no tribunal case law about ordinary home deposits. The tribunal’s small claims ceiling is $5,000, and a deposit on a home is usually far more than that, so those fights go to court instead, where the decisions cannot be read for free.

The one real house case, Brind’Amour, has a detail worth noticing. The deposit had been paid to the seller personally, not into a brokerage trust account. That is precisely why a tribunal could order it handed back. Had it been sitting in a brokerage trust account, the tribunal would have been ordering a non-party to release money it was holding as a stakeholder.

Mistakes that cost money

• Assuming an unremoved subject gets your money back on its own. It gives you the right. It does not move the money. You still need the seller’s signature or an order.
• Letting the release form wait. Ask for it the day the contract ends, while the other side still wants the sale to go quietly. A month later they have a reason to bargain with it.
• Signing a deposit out of a brokerage trust account. Section 27 (4) allows it. Everything protective on this page stops applying when you do.
• Treating the three-day rescission as a free look. It costs 0.25% of the price, payable to the seller, and it comes out of your deposit first.
• Counting the three business days from the wrong day. The statute measures from the date acceptance was signed. The regulator reads the count as starting the day after. Ask your agent to put the exact expiry date in writing.
• Missing a staged deposit in a presale. Under section 18 (4), that is the trigger that can let a developer have the whole deposit released on its own certificate.
• Waiting too long. Two years from discovery, under the Limitation Act, and a standoff can eat a year without anybody noticing.
• Expecting the brokerage to resolve it. It is not allowed to take a side, and it is not required to go to court. Doing nothing is lawful.

Questions buyers actually ask

Who keeps the deposit if the buyer backs out?

It depends on the contract, and then on who signs. Where the contract makes the deposit non-refundable and absolutely forfeited, BCREA’s own commentary says an innocent seller may keep it whether or not they lost money — but only “depending on the terms of the contract”, and only up to the amount of the deposit and no more. None of that moves the money out of trust without a signed release or an order.

What happens if the buyer never pays the deposit at all?

The seller is not simply stuck. In Legally Speaking #527, BCREA describes a case where a purchase of roughly $6,500,000 carried a non-refundable deposit of $300,000 due within ten business days, the buyers did not pay it, and judgment went against them for the $300,000 plus interest and costs. I could not open that judgment from here, so I am reporting BCREA’s description of it rather than the decision itself. There is also a rule requiring your agent’s managing broker to tell every party in writing if a contemplated deposit never arrives, or if the cheque does not clear.

Do you get your deposit back if financing falls through?

Only if your contract still had a financing subject in it, and even then only by release or court order. If you removed the subject and then could not finance the purchase, you are in breach, and the deposit is the first thing the seller will claim.

Can a buyer just walk away from a deal?

For the first three business days after acceptance is signed, on most residential purchases, yes — for any reason, for 0.25% of the price. After that, walking away is a breach of contract, and the deposit is usually the least of what is at stake.

The other side is refusing to sign the release. What do I do?

In order: ask in writing and set a date. Get legal advice — BCFSA’s own answer for consumers is that “If the parties do not agree, they should seek legal advice.” Then decide whether to start a claim, because nothing else will shift it. A brokerage can apply to pay the money into court, but it is not obliged to, and it may simply keep holding it.

How long can a brokerage hold my deposit?

There is no published maximum. The only clock in the Act is section 32, which lets a brokerage transfer money to the administrator under the Unclaimed Property Act after reasonable efforts to find the owner fail and the money has been unclaimed for more than one year. That is not a release to you. It is the money leaving.

Does the deposit earn me interest?

Not unless your contract says so in writing. Otherwise the interest goes to the Real Estate Foundation of British Columbia.

What I could not confirm, and did not print

• What happens when the deposit is smaller than 0.25% of the price. The rescission regulation does not address the shortfall. I read it end to end. I have not guessed.
• The judgments behind BCREA’s case notes. The BC courts’ own site and the free case databases cannot be reached from here, so Tang v. Zhang, Argo Ventures v. Choi and Vanvic Enterprises v. Mack are reported as BCREA describes them, not as the judgments read.
• Provincial Court and Supreme Court filing fees. Not on any page I opened for this article, so there are no numbers for them in the table above.
• A number of days for paying or releasing a deposit. There is none in the Act, the Rules or the regulations. The word used is “promptly”. If anyone quotes you a statutory deadline, ask them for the section.
• A maximum period a brokerage may hold a disputed deposit. Nothing published sets one.
• The tribunal’s own time-to-resolution table. Its help page says to see the table below, and the table renders empty. The figures above come from its annual report instead.

Everything else on this page was checked at the source that owns it, and then checked again in a second pass against the original text rather than a summary of it.

Read next

• From accepted offer to completion day in BC — what happens in between, step by step.
• What a property disclosure statement does not cover — and the decided cases buyers lost.
• Lawyer or notary for a BC home purchase — who may do what, and what each costs.
• Buying a presale on the North Shore — including what an assignment really costs.
• First-time buyer in North Vancouver: what it really costs — the completion-day numbers.
• All of the guides are listed at tomjahed.ca/guides.

Written by Tom Jahed, licensed REALTOR®, Vanak Realty, North Vancouver.