The Lost Deposit Cheque in Ontario


Firm Buyer deal. I’m the Buyer’s agent. I drop off the bank draft deposit cheque to (and payable to) the listing brokerage and get a receipt.

Over a week later we get a call that the listing brokerage can’t find the bank draft.

The Buyer goes to the bank to get a replacement draft and is told that if the old one is cashed they are still on the hook for it and the money will be deducted from their account. (The money is out of the Buyer’s bank account and the first draft if cashed will still be processed by the bank.)

We say to Listing Brokerage that they need to indemnify the Buyer on the replacement cheque before the Buyer drops it off, that is, the Listing Brokerage will pay the funds to the Buyer if anyone other than the Buyer cashes the draft,(the Buyer has already signed at the Bank they will not cash the cheque and we can provide proof of that).

The Listing Brokerage responds that they will only promise they won’t cash it, but are not willing to indemnify if it is cashed period (meaning by anyone other than the Buyer).

We have a receipt for the deposit already. So is the deposit considered paid still?

Does deposit protection kick in for the LB in this case?


The deposit has been paid.

This situation demonstrates why that deposit receipt is so important.

The deposit insurance coverage deals with:

1) fraud,

2) insolvency and

3) misappropriation.

This actually may not qualify as any of them. The Listing Brokerage just “lost it”. They will have to honour it, just as if it were indeed placed in their trust account. Misplacing the cheque is not fraud. It’s not misappropriation and, of course they are not insolvent.

You would be doing them quite a favour by co-operating and helping them find their lost draft, or their lost signs or their lost cellphones.

I really don’t think that they are in the position to negotiate with strength the terms of the Buyer’s assistance.

Brian Madigan LL.B., Broker

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