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Updated December 19, 2019 by Mike Stewart PREC

Real estate deposits for offers in Vancouver

In Episode 8 of the First Time Home Buyers guide, we discussed Price on the Contract of Purchase and Sale. On this page, we’re going to talk about the buyer’s real estate deposit in the BC Contract of Purchase and Sale in detail.

What is a real estate deposit?

The Cambridge Dictionary defines a deposit as follows:

“A sum payable as a first installment on the purchase of something or as a pledge for a contract, the balance being payable later.”

Purchasing a home is very different from purchasing most other things in life.

Most people live in their homes (or have tenants living there if its a rental property) and when selling their property, often need time to find a new home (or give proper notice to their tenants) and to prepare to move out.

Typically there are several weeks to several months from when the buyer and seller agree to an accepted offer and the time when ownership of the property actually changes hands (referred to as the Completion Date).

Why are there real estate deposits for property purchases?

To ensure the buyers will do as promised on the Completion Date.

Sellers almost always require buyers to submit a deposit with an accepted offer or shortly afterwards.

In real estate in British Columbia, deposits are referred to as “consideration” in a purchase contract and is used for the following:

  • Keeps the buyers focused as they could lose their deposit if they do not. The deposit money is held so that the seller could take this money if the buyers do not move forward with the purchase as the buyers agreed to in the purchase contract.
  • Gives the parties to the contract a clear idea of what the buyer would lose (at minimum) if they buyer does not move forward with the purchase.

When a real estate purchase offer is written, a good faith deposit is almost always offered (But not paid immediately!) when a Buyer submits an offer or Contract of Purchase and Sale to buy a residential property in Vancouver.

This deposit money in the form of a bank draft or wire transfer (Cash, certified or personal cheques are NOT acceptable) is deposited when the Buyer removes their subject subject conditions from the offer. This money is typically held in the Buyers Agent’s brokerage trust account to ensure the Buyer is committed to the transaction and will go forward with the deal on the Completion Date.

This deposit money forms part of and is included in the purchase price of the property.

Real estate deposits are sometimes referred to as a security deposit as it secures the property for the buyer.

What does a real estate deposit look like in the BC Contract of Purchase and Sale?

Here is an example of the deposit section of  BCREA purchase contract that is used in BC:

On page 1 of 7 Section 2 on the sample offer or Contract of Purchase and Sale (see below) beneath Section 1 Price, you will find the amount of the deposit and the details on how and when it will be paid and held.

Sample Contract Of Purchase & Sale Mike Stewart PREC

When is a real estate deposit paid in Vancouver?

In most cases the deposit is NOT PAID upon acceptance of the offer!

The Deposit is usually paid on the subject removal date.

The subject removal date is typically 7 days after acceptance of the offer, once the buyer is completely satisfied with the property and removes their subject conditions (making the contract legally binding on the buyer as well as seller) which in the example below would be April 19, 2019.

With our sample offer below, Anne Buyer offers a $25,000 deposit payable within 24 hours of subject removal, ie when the Buyer is 100% satisfied and decides they want to go forward with the deal on the Completion Date.

We typically have deposits payable within 24 hours of final subject removal for offers that are subject to.

Allowing for the deposit to come in 24 hours after subject removal allows the buyer time to go to the bank to get the draft. Some Realtors have the deposit payable upon subject removal. There is variation in Vancouver real estate market in how this handled.

Deposits can be paid upon the acceptance of an offer, but typically this only happens when a buyer submits a subject free offer. A subject free offer is when a buyer buys a property with no subject conditions and so once there is an agreement on terms and price the contract legally binding on buyer and seller, a deposit is required.

Subject free offers with deposit included are often used by buyers in multiple offer situations to improve a buyers chances of getting a property.

Please note – there is variation to all of this. If you are thinking of buying a property please do consult with a qualified Realtor and/or Lawyer.

Can I submit a deposit on a house purchase later than agreed?


Time is of the essence is a common and extremely common term in real estate. Time is of the essence essentially means that things need to happen when they are supposed to happen and if they do not happen when they are supposed to happen, bad things can happen to those who are late.

By submitting an deposit on a house purchase late than agreed in the contract, a buyer could find themselves in one of the following situations:

  • breach of contract which could result in the contract being voided.
  • getting sued.

In a situation where a buyer bought a property in a multiple offer situation and the seller could easily re-sell the property to another buyer submitting an offer late might allow the seller the opportunity to sell it to another buyer for more money.

Likewise in a soft market situation, a seller may sue a buyer for not submitting a deposit on a subject free contract of purchase and sale that could be successful causing the buyer huge headaches as well as potentially a lot of money.

If you are in a situation were you feel you may be late in paying a deposit, let your Realtor know and they might be able to get you an time extension from the sellers in the form of an addendum to the contract.

It is also advisable to consult with a qualified lawyer if there is

How much is the standard deposit amount in the Vancouver real estate market?

The standard deposit amount in the Vancouver Real Estate market is 5% of the initial asking price.

That said, the buyer can propose any deposit amount they want. The buyer can also alter when the deposit is paid depending on the circumstances of the transaction.

Often buyers will offer more than the typical 5% if they are competing with other buyers in a multiple offer situation. Buyers do this to make their offer more attractive as a bigger deposit shows that the buyer is serious as they are putting more money at risk to lose if they do not move forward with the purchase.

Buyers needing a long period of time to complete may offer a bigger deposit to make the sellers more comfortable. Or the sellers may require a larger deposit from a buy if they are unsure the buyer will complete on a sale. The largest deposits I have seen in my business was 30%, but I have hear of higher deposits.

At the end of the day, a purchase deposit will be what ever buyers and sellers agree to and feel comfortable with, but typically it is 5%.


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Who is a real estate deposit made out to?

The deposit can only be submitted in the form of a bank draft (AGAIN – No personal cheques, certified cheques, or Cash!) or wire transfer and is typically made out to the buyers agents office name followed by the words “In Trust”.

So if I am representing the Buyers, a Buyers deposit in form of a bank draft will be made out to “Oakwyn Downtown Realty LTD. In Trust”.

In some cases the deposit may be paid directly to the sellers with an accepted offer or upon subject removal and will therefore be made out in the names of the sellers.

Also, in some situations a deposit may be submitted to the sellers agents trust account or to a lawyers trust account, but this is quite rare.

Real estate offers ARE NEVER supposed to be made out to a Realtor who is representing a client in the transaction.

How is a real estate deposit paid in Vancouver?

In most transactions, the bank draft is submitted to the buyers agents office as soon as its received.

If a deposit is late, this could be seen as a breach of contract. See below for more explanation of late real estate deposits.

If there is a wire transfer, the buyer and seller need confirmation that the wire was sent and received.

Personal cheques are not acceptable as real estate deposits in BC.

Cash is not acceptable due to FINTRAC requirements.

Can a buyer lose their deposit when buying a property?


If the Buyer removes their subjects and the Buyer does not Complete the transaction on the Completion Date or move forward with the deal, there may be a chance the Seller could keep the Buyers deposit (confirm this with a lawyer).

An example of this situation would be as follows:

A buyer gets an accepted offer on a property, they remove their subjects on the purchase contract.

In the run up to the completion date the buyer’s lender tells them they cannot get the mortgage.

The buyers cannot borrow money from anyone else and cannot complete the purchase of the property on the completion date.

In that situation, the seller could take the (Please consult with a qualified lawyer if you are in this situation) buyers deposit.

The key to avoiding this situation is to hire a qualified Realtor and/or lawyer to assist in the purchase of a property and to work with a reputable lender if a mortgage is required.

Who holds the deposit on a house purchase?

Whoever the buyer and seller agree to hold the real estate deposit will hold it.

That said, in British Columbia the deposit money in a property purchase is typically held by the buyers agents Real Estate office.

The buyers agents office hold the real estate deposit in their Trust Account.

Deposits can also be given directly to sellers with an accepted offer or on subject removal or can held by lawyers assisting the parties to the contract.

Is the buyers deposit safe when putting a deposit on a property?

Deposits held by a real estate office trust accounts are quite safe and are vigorously regulated by the Real Estate Council of BC.

Money held by a real estate office’s trust account can only be released under three circumstances:

  1. The Contract of Purchase and Sale Completes (ie the deal goes through) at the Land Titles Office and the property in question is sold to the Buyer. The deposit money held in the Trust Account will be released to the Seller along with the rest of the purchase price.
  2. The Contract of Purchase and Sale does NOT complete (ie the deal does not go through) due to the fault of the Seller and the Buyer may be able to get their deposit back (confirm this with a lawyer).
  3. If there is a legal dispute that goes to Court between Buyer and Seller the Deposit can be paid into Court.

The deposit money is held in the trust account at the buyers agents office even if the buyers agents office shuts down, goes bankrupt, or in any way ceases to exist or do business.

Deposits given directly to sellers upon subject removal or with with an accepted offer may not be as safe.

The risk in this situation is that if a seller decides not to complete on a sale, the buyer may be forced to use legal means to have the seller move forward with a transaction or to get the deposit back with can be extremely expensive and time consuming.

This mostly why deposits are held in an real estate office trust account.

Have an accepted subject free offer and don’t want to submit the deposit

Lets say a buyer gets involved in a multiple offer situation and in the heat of the moment pays a very high price for a property. The offer submitted was a subject free offer. The seller accepts and there is a legally binding contract between buyer and seller. The purchase contract stipulates that the buyer submit their offer within 24 hours of an accepted offer.  That evening the buyer speaks to a trusted friend who questions the price paid for the property. The next day when the buyer is required to pay their deposit, they decide not to submit their deposit and want to kill the deal because they paid too much.

This is very risky course of action for the buyer and could result in the buyer being successfully sued by the seller.

If you are in this situation it is strongly advised you seek qualified legal advice as the situation could turn very nasty very quickly for the buyer.

What is the difference between a deposit and a down payment in a home purchase?

A deposit is an initial payment near the start of the transaction to make the purchase legally binding and the ensure the buyer has enough skin in the game to make the seller comfortable until the completion date.

A down payment is typically the amount of cash a buyer comes up with in a purchase distinct from the mortgage money or other money borrowed to purchase the property. The down payment is money is given by the buyer to the lawyer/notary near the end of the transaction just before the completion date in the form of a bank draft or wire transfer. The down payment forms part of the money given to the seller in exchange for ownership of the property.

Does the deposit form part of the down payment?

Absolutely it does.

The deposit gets added to and forms part of the down payment amount the notary/lawyer who is conveying the title (the legal process of swapping title for money) gives to the seller as part of the purchase price paid by the buyer. This down payment is

What happens to a real estate deposit at completion?

The becomes part of the buyers down payment on the property, which as explained above the money the buyer brings to the purchase as distinct from money borrowed like a mortgage. The deposit, down payment, and all other fund including mortgage money goes to the seller on the completion in exchange for the ownership of the property.

Can the seller keep the deposit if the buyer does not complete?

There is strong chance the seller can take the buyers deposit if the buyer does not complete. If the seller already has the deposit because it was released to the seller by the buyer, the seller could possibly keep the deposit and sell the property to another buyer.

Confirm with a qualified lawyer, but the seller may be able to sue the buyer for not completing on the purchase agreement to get more money from the buyer or to force the buyer to complete the sale.

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