For: First-time buyers and investors · Updated 2026-10-28

Is my presale deposit safe if the developer goes under?

By Uzair Muhammad, REALTOR®, Real Broker BC

Quick answer

It depends on how your deposit is held. Under BC's REDMA, deposits sit in trust with a lawyer, notary or brokerage, or are covered by deposit protection insurance. Insured deposits can be released to the developer for construction, which makes recovery harder if the project fails. Check which applies in your disclosure statement before you sign.

Two ways your deposit can be held

Trust: the deposit stays in a lawyer's, notary's or brokerage's trust account until completion. This is the stronger position for a buyer.

Deposit protection insurance: the developer can use deposits to help fund construction, backed by an insurance or surety product. BC's regulator notes that deposits may not be recoverable if a developer becomes insolvent, so read exactly what the policy covers.

What 2026 showed us

Several Metro Vancouver projects went into receivership or creditor protection in 2025–2026, including towers in Burnaby, Surrey and Langley. In August 2026 the BC Supreme Court allowed 39 buyers at Lumina Eclipse in Burnaby to void their contracts under REDMA, partly for disclosure failures that happened after they signed. What happens to their deposits was left for a separate hearing.

The lesson: disclosure rules give buyers real rights, but getting money back from a failed project is slow and uncertain.

How to check a project before you sign

Read the disclosure statement's deposit section: trust or insured?

Check whether the project has construction financing in place, or is still subject to pre-sale thresholds.

Look at the developer's completed buildings, not just renderings.

Use your 7-day rescission period to have a lawyer review the documents.

Worried about a project you've bought or are looking at?

Book a 10-minute call. We'll check how your deposit is held and what we know about the developer's track record.

Book a free 10-minute call · Call or text (672) 258-1100

Buyer-side only · 450+ families helped · 2 defaults · 4.9★ from 36 Google reviews. Our fee is typically paid by the developer, so working with us usually costs you nothing. We confirm this on every project.

Frequently asked questions

Where is my presale deposit held in BC?

Either in trust with a lawyer, notary or brokerage, or released to the developer under deposit protection insurance. The disclosure statement says which.

Do I get my deposit back if the project is cancelled?

If the developer cancels and your deposit is in trust, it's normally returned. If the developer is insolvent or deposits were released under insurance, recovery depends on the insurance and the court process.

What was the Lumina Eclipse decision?

In August 2026 the BC Supreme Court let 39 buyers void their contracts under REDMA, including for disclosure failures after signing. The deposit question went to a separate hearing.

How can I tell if a developer is in trouble?

Watch for missed construction milestones, repeated completion delays, amendments that push dates out, and news of receivership filings. A buyer-side agent tracks this across projects.

Sources

This is general information, not legal, tax or financial advice. Rules change; confirm with a lawyer, accountant or mortgage professional before you act.

About the author

Founder of Presale Properties Group. Spent 10 years at the City of Surrey in Planning and Bylaws before real estate. Represents buyers only on new construction across Metro Vancouver and the Fraser Valley.