Can a Seller Back Out of an Offer in Canada?

Selling a home in the GTA can move fast. Multiple offers, tight timelines, and life changes can make even a confident seller wonder: can I back out after I’ve accepted an offer? The short answer is rarely, and only in narrow, contract-based scenarios. Once there is a binding Agreement of Purchase and Sale (APS), Ontario law treats it as a contract the courts will enforce.

Below is a plain-language guide for GTA sellers on when a seller can walk away, when they cannot, what happens to the deposit, and how to protect yourself before you sign. This is general information, not legal advice—always consult your real-estate lawyer for your specific situation.

Fast Primer: When Is a Deal “Real”?

The irrevocable period

Most offers in Ontario use the OREA APS with an irrevocable clause. During that window, the party who made the offer cannot withdraw it, and if the other side signs acceptance within that time, you have a binding deal. If the irrevocable time expires without acceptance, the offer dies on its own.

“Firm” versus “conditional”

• Conditional deals include clauses (financing, inspection, sale-of-buyer’s-property, etc.).
  
  

• A deal becomes firm once all conditions have been waived or fulfilled within the set timelines.

When Can a Seller Back Out?

1) Before Acceptance

If you have not signed the buyer’s offer (or a counteroffer hasn’t been accepted), you can simply let the irrevocable lapse or decline to sign. There is no contract yet.

2) Using an Escape Clause (the 24–48-hour clause)

If your first deal is conditional (commonly on the buyer selling their current home), your agent can negotiate an escape clause. This lets you keep showing the home and, if a better offer arrives, give the first buyer a set period (often 24–48 hours) to go firm or step aside. If they do not go firm in time, you may accept the new offer. This tool must be written into your APS.

3) A Seller-favouring Condition Fails

Occasionally sellers negotiate a condition in the seller’s favour (for example, securing specific release terms on their next purchase). If that condition is not satisfied within its timeline, the agreement can end, usually with the deposit returned according to the contract.

4) Both Parties Sign a Mutual Release

Buyer and seller can agree—in writing—to cancel the deal using a Mutual Release. Without it (or a court order), the deposit cannot be disbursed by the brokerage trust account.

5) Legal Doctrines (Rare): Frustration

Courts may excuse performance if an unforeseen event makes carrying out the contract radically different from what was agreed (the doctrine of frustration). This is uncommon in residential sales; market changes or buyer financing problems typically do not qualify.

When a Seller Cannot Back Out

After a Firm Acceptance

Once you have a binding, firm APS, deciding not to close because you got a higher offer, or changed your mind, is typically a breach of contract. Buyers can seek specific performance (a court order compelling you to complete the sale) or damages (the financial difference between the contract price and market value at the time of breach, plus provable costs). Courts reserve specific performance for properties shown to be “unique,” but sellers can, and do, face significant damage awards when they refuse to close.

What Happens to the Deposit if the Deal Collapses?

• Held in trust. In Ontario, deposits are held in a brokerage trust account (or lawyer’s trust) and cannot be released without a Mutual Release signed by both parties or a court order—even if one side is clearly in breach.
  
  

• If conditions fail. When a condition is not fulfilled/waived by the deadline, the deal typically becomes null, and the deposit is returned, but the trust holder still needs signed instructions from both sides (Mutual Release) to release the funds.

Special Note on “Cooling-Off” Periods (Who Actually Has Them?)

• New Condominiums (pre-construction). Ontario gives buyers a 10-day cooling-off period to cancel after receiving the required documents. This right belongs to buyers, not sellers.
  
  

• New Freehold Homes. Ontario’s Homeowner Protection Act, 2024 introduced a statutory 10-day cooling-off period for buyers of new freehold homes, to take effect upon proclamation via regulations. The province consulted on the rules in late 2024, and official materials note the cooling-off period comes into force once the regulations are in place. Either way, this cooling-off right is for buyers, not sellers. Confirm current status with your lawyer at the time you sell.

Practical Playbook for GTA Sellers

Before You Sign

• Decide your flexibility. If you know you will keep marketing the property while a buyer works through conditions, negotiate an escape clause up front.
  
  

• Set realistic irrevocable times. Too-short timeframes add pressure and increase mistakes; make sure there is time to review with your lawyer.
  
  

If You Want Out After Signing

1. Check your conditions. Did a seller-side condition fail? Are timelines clearly missed?
   
   

2. Speak to your lawyer immediately. Your legal options and risk depend on the precise wording of your APS.
   
   

3. Consider a Mutual Release. If both sides agree to unwind the deal, it is the cleanest solution—and it is needed to release the deposit from trust.
   
   

If the Buyer Breaches

• Your lawyer may pursue damages and, in rare cases, specific performance. The measure of damages often centres on the gap between your contract price and the property’s value when you mitigate (for example, when you resell), plus provable costs.

Clear Answers to Common Seller Questions

“Can I accept a higher offer after I already accepted the first one?”

Not if the first deal is firm. You are under contract. Attempting to walk for a higher offer risks lawsuits and damages.

“The buyer missed their condition deadline—are we done?”

Usually, yes—the deal fails if a condition is not waived/fulfilled on time. You will still need a Mutual Release (or court order) to move the deposit.

“Can I just keep the buyer’s deposit if they walk?”

Not automatically. Trust money stays put until both parties sign or a court orders release.

“What if something huge happens that makes closing impossible?”

That is the frustration doctrine—rarely applicable in residential sales. Speak to your lawyer right away.

Thinking of Selling? Talk to a Team That Gets the Fine Print

Meet The Johnson Team — Toronto Real Estate. Backed by deep market knowledge, creative marketing, and steady, practical guidance, Jeff and Liz Johnson lead one of the GTA’s top-performing teams. We keep you ahead of deadlines, clauses, and compliance, so your sale closes cleanly, and on your terms. Whether you want to structure an offer with an escape clause, weigh competing terms (price, deposit, timing, and certainty), or navigate next steps after a conditional period, we are here to protect your interests, and your net.

Ready to move forward with confidence? Start your sale strategy today—contact The Johnson Team to connect with an agent right away.