When an offer falls through in Ontario real estate, it can stop everything in its tracks. The moving plans, the excitement, the sense of progress — all of it pauses while both sides try to figure out what went wrong and what happens next. 

It’s a stressful situation, sure, but it’s also a common one. In this blog post, we explain why offers fall through in Ontario, what happens to the deposit, and what both buyers and sellers should do when it does.

Why Offers Fall Through in Ontario Real Estate

Most real estate deals fall through for one of the following reasons:

• Financing issues. A buyer’s mortgage can fall through if their financial situation changes or if the property doesn’t appraise at the agreed price.
• Inspection problems. Major repairs or safety issues discovered during an inspection can make buyers reconsider.
• Sale-of-home delays. Buyers who need to sell their current home first sometimes can’t meet the closing date.
• Cold feet. Some buyers change their minds after realizing the commitment or cost feels too high.
• Seller problems. In a few cases, sellers miss deadlines, fail to complete agreed work, or decide not to move forward.

If a conditional offer fails because a valid condition wasn’t met — and proper notice is given — the deal ends without penalty. But once those conditions are removed and the offer becomes firm, neither side can back out without real financial consequences.

What Happens If an Offer Falls Through in Ontario

When a deal fails, the two biggest questions are usually who keeps the deposit and who is responsible.

Let’s tackle the first one. In Ontario, deposits are held in trust by the listing brokerage and can only be released if both parties sign a mutual release or a court order is obtained. If a conditional deal ends because a buyer couldn’t satisfy a valid condition, like financing or inspection, the deposit usually goes back to the buyer.

Now, if the offer was firm and the buyer backs out of a home purchase in Ontario, the seller can often keep the deposit and may also claim damages if they end up selling for less later. For example, if the first buyer agreed to pay $900,000 and the next sale closes at $880,000, the seller might pursue that $20,000 difference plus legal and carrying costs.

On the other hand, if the seller fails to close, the buyer can take legal action to get the deposit returned and claim expenses such as temporary housing or moving costs. 

Every case depends on the agreement details, so both sides should get legal advice before signing anything related to the deposit.

What to Do When an Offer Falls Through

When an offer falls through, both sellers and buyers have clear steps to protect themselves and move forward.

When an offer falls through, sellers should:

• Review the agreement with their real estate agent and lawyer to confirm whether the buyer met all deadlines and notice requirements.
• Wait before agreeing to release the deposit until their lawyer has reviewed the situation.
• Relist the property quickly to keep market momentum and buyer interest.
• Keep written records of all communication and documents in case of a dispute.

Things work a bit differently for those on the other side of the coin. If a buyer’s real estate offer falls through, they should:

• Confirm that the deal was properly terminated and that their deposit will be released correctly.
• Speak with their lender to understand what went wrong and what needs to be fixed before making another offer.
• Reassess their timing, budget, or property search to avoid running into the same problem again.
• Stay calm — these situations are common, and the key is handling them methodically.

Getting Help When a Deal Falls Through

A failed offer is stressful, but it doesn’t have to completely derail your plans. The best next step is to get clear advice before deciding what to do, whether that means relisting, revising your budget, or preparing for your next offer.

And if you need a hand, Hawkins Real Estate Group can help you move forward with confidence.

Get in touch today to talk through your situation and take the next step toward your next successful sale or purchase.