Whether you're the buyer or the seller, a collapsed deal raises the same core question: what happens to the deposit, and does anyone owe anyone else anything? The answer depends heavily on why the deal fell apart and when.
If a Condition Isn't Met (Buyer's Side)
If a buyer's financing, inspection, or other stated condition genuinely isn't satisfied by the deadline, and proper notice is given as required by the contract, the buyer can typically walk away and have their deposit returned. The key word is "properly" — the notice must comply with exactly what the contract requires, or the seller may dispute the buyer's right to walk away.
If a Buyer Walks Away After Conditions Are Removed
Once conditions are waived or satisfied, the contract generally becomes firm and binding. A buyer who backs out at this stage without a valid legal basis risks:
- Forfeiting the deposit to the seller
- Being sued for damages — the difference between the contract price and what the seller eventually sells for, plus carrying costs
- In rare cases, a claim for specific performance, forcing completion of the purchase
If a Seller Backs Out
Sellers who refuse to close without a valid legal basis can also face a specific performance claim or a damages claim from the buyer, particularly where the buyer has already taken steps (mortgage commitment, moving arrangements) in reliance on the deal closing.
What to Do the Moment a Deal Looks Like It's in Trouble
- Review the exact wording of the relevant condition or clause immediately — timing and precise compliance matter enormously
- Don't send informal texts or emails that could be read as an admission or an improper attempt to terminate
- Get legal advice before taking any unilateral action, especially before releasing or claiming a deposit
Frequently asked questions
Can I get my deposit back if I just change my mind?
Not generally, once your conditions are removed — a deposit is meant to demonstrate serious commitment, and simply changing your mind isn't a recognized basis to reclaim it.
Who holds the deposit while a dispute is being resolved?
Deposits are typically held in a brokerage's trust account and released only on mutual written direction or a court order — neither party can unilaterally claim it.
Is it worth suing over a failed deal?
It depends on the amount at stake and the strength of your position; many disputes are resolved through negotiation once both sides understand their legal exposure, without going to court.
This article provides general information about Alberta real estate law and is not legal advice. If your deal is at risk, book a consultation with GSD Law Group immediately.
Related reading: Common Title Issues When Buying Property in Calgary · Selling Your Home in Calgary: A Legal Steps Checklist
Contact GSD Law Group: Westwinds (403) 455-2151 · Savanna (403) 475-2157
