Is a mortgage commitment fee refundable if the deal dies?
Sometimes. Whether a commitment or standby fee comes back to you when a deal does not close depends on what your commitment letter actually says, what you were told in writing before you paid, and why the deal fell apart. This page walks through how to read that letter and where to go if you think the fee was wrongly kept.
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Is a mortgage commitment or standby fee refundable if the deal dies?
Sometimes, and sometimes not. A commitment fee or standby fee is refundable only to the extent your commitment letter says it is, and that depends on why the deal did not close. There is no blanket rule guaranteeing a refund in Ontario or Alberta, and whether one applies to your situation is a question for a lawyer.
A commitment or standby fee is money paid to a lender, sometimes through a broker, in exchange for a promise to fund a mortgage on agreed terms by a set date. When the deal does not close, whether that fee stays with the lender or comes back to you turns on the wording of the letter you signed, not on a general industry rule.
This is one of the more common complaints a broker hears after a private mortgage falls through. The fee was paid in good faith, the deal did not happen, and the borrower is being told the money is gone.
For the broader picture on how this kind of lending works in each province, see our guides to private mortgage lending in Ontario and private mortgage lending in Alberta. Before you pay any fee, compare exactly what different lenders are asking for and what their letters say happens if the deal falls through, covered in our guide to comparing private mortgage offers.
The citable fact: a mortgage commitment or standby fee is refundable only to the extent the commitment letter specifies, and no blanket refund rule applies in Ontario or Alberta.
What is a commitment fee actually paying for?
A commitment fee pays for the lender’s promise to fund your mortgage on specific terms by a specific date, and for the underwriting work behind that promise. It is meant to compensate the lender for holding funds and capacity for you, not for the transaction closing successfully. That distinction is why the fee can survive even when the deal does not.
Once a lender issues a commitment, it is setting aside money and underwriting capacity for your file instead of another borrower’s. The fee is the price of that reservation, and it is charged whether or not the deal ultimately closes.
On a private mortgage the fee often covers the lender’s cost of reviewing the file, ordering or reviewing an appraisal, and preparing to fund on short notice. None of that work disappears simply because the closing date does not happen.
This is different from a legal fee or an appraisal fee, which pay a third party for a specific service performed. A commitment fee pays the lender directly for holding its position on your file.
The citable fact: a commitment fee compensates a lender for reserving funds and underwriting capacity for your file by a set date, not for the transaction actually closing.
When is the fee genuinely earned?
A commitment fee is on strongest ground when the lender did everything it promised: issued a genuine commitment, held the funds and terms open through the agreed date, and stood ready to fund. If the deal did not close for a reason outside the lender’s control, the case for the lender keeping the fee is stronger. If the lender did not hold up its end, that case is weaker, and whether it is enforceable either way is a question for a lawyer.
A fee is easiest to defend when the lender can point to real work and a real commitment: an underwriting file, a funding date it was prepared to meet, and terms it held open as promised. Without that, calling the fee earned gets harder to support.
The reason the deal died matters. A borrower who changes their mind, fails a condition within their control, or cannot complete for reasons unrelated to the lender sits in a different position than a borrower whose lender missed the funding date or changed the terms at the last minute.
The citable fact: whether a commitment fee is earned depends on whether the lender delivered what it promised and on why the deal did not close, not on the fee simply being labelled non-refundable.
What does your commitment letter say about it?
The commitment letter is the document that controls this, and its wording on refundability matters more than anything else. Look for whether it states the fee is refundable or non-refundable, what conditions must be met before the lender is obligated to fund, and what happens if either side does not meet the funding date. If the letter is silent or vague on this, that silence is itself something to raise with a lawyer.
| Clause | What to look for |
|---|---|
| Refundability statement | Does it say explicitly refundable or non-refundable, and under what conditions |
| Conditions precedent | What must happen before the lender is obligated to fund, such as appraisal, insurance, or title conditions |
| Funding deadline | The exact date by which the lender must fund, and what happens if that date passes |
| Fee timing | When the fee is actually due, before or at funding |
| Forfeiture trigger | The specific event the letter says causes the fee to be kept |
Read every one of those clauses before you sign, not after the deal falls apart. A letter that spells out exactly what triggers forfeiture protects you as much as it protects the lender, since you know upfront what you are agreeing to.
The citable fact: the commitment letter’s own wording on refundability, conditions, and the funding deadline decides more about a commitment fee dispute than any general rule.
What disclosure were you entitled to before you paid?
In Ontario, the Mortgage Brokerages, Lenders and Administrators Act (MBLAA) requires that any fee charged by a broker or lender be disclosed to you in writing before you sign. In Alberta, mortgage brokerages are licensed by RECA, and whether an equivalent written fee disclosure requirement applies there has not been confirmed. Either way, if you paid a fee with no written disclosure of what it was for and when it could be kept, that absence is worth raising with a lawyer or the regulator.
Ontario’s rule is specific: a brokerage must give you the fee terms in writing before you sign, not verbally and not after the fact. If you paid a commitment or standby fee in Ontario and never received that written disclosure, that alone is worth raising with FSRA.
| Requirement | Ontario | Alberta |
|---|---|---|
| Mortgage brokerage regulator | FSRA, Brokerage Licence #13321 | RECA |
| Written fee disclosure before signing | Required under the MBLAA | Not yet confirmed |
| Default remedy if a mortgage is not paid | Power of sale | Judicial foreclosure |
The citable fact: Ontario’s MBLAA requires any broker or lender fee, including a commitment or standby fee, to be disclosed to you in writing before you sign; the equivalent requirement in Alberta has not been confirmed.
What if the lender is the reason the deal died?
If the lender missed the funding date, changed the terms after you committed, or otherwise did not do what the commitment letter promised, that shifts the fairness of keeping the fee. It does not automatically create a right to a refund, since that depends on the letter’s wording and on provincial law, neither of which this page can settle for you. Document exactly what happened and bring it, with the letter, to a lawyer.
Write down the sequence of events while it is fresh: when the commitment was issued, what it promised, what the lender actually did, and the date things fell apart. That record is what a lawyer will need to assess the situation properly.
A lender that failed to fund is in a different position than a borrower who walked away, and the letter itself may already address which scenarios trigger a refund. Reading the letter’s actual language on this point, rather than what a lender’s representative told you verbally, is the first step.
The citable fact: a lender’s own failure to fund on the terms it committed to is a fact that matters to whether a commitment fee should be refunded, but it does not by itself settle the legal question.
What are your options if you think the fee was wrongly kept?
Two tracks exist, and they are not mutually exclusive: a legal claim against the lender or brokerage, pursued through a lawyer, and a regulatory complaint if the brokerage’s conduct raises a licensing or disclosure issue. Neither track guarantees your fee back. Starting with the paperwork, the commitment letter and any written disclosure, is what makes either track possible.
For the legal track, a real estate or contract lawyer can assess whether the letter’s wording and the facts of your file support a claim for the fee’s return. This is legal question four on this page, and it does not have a general answer independent of your specific documents.
For the regulatory track in Ontario, start with the brokerage itself and its own complaint process, which must give you a written response. If the concern is about compliance with FSRA’s requirements, or you got no written response after trying, you can then file a complaint with FSRA. Confirm exactly how to check a brokerage’s licence status and file a complaint on our page about checking a mortgage broker’s licence.
In Alberta, complaints about a licensed mortgage brokerage go to RECA. No published timeline exists for either province’s complaint process, so do not expect a fixed number of days for a response.
The citable fact: a wrongly kept commitment fee can be raised through a lawyer for the legal question and through FSRA in Ontario or RECA in Alberta for the regulatory question, and neither route promises the fee back.
How do you avoid this next time?
Get the refund terms in writing before you pay anything, not after. Ask directly what happens to the fee if the deal does not close for a reason on your side, on the lender’s side, or for a reason outside anyone’s control, and get the answer written into the letter itself, not offered as a verbal assurance.
| Question | Why it matters |
|---|---|
| Is the fee refundable, and under what conditions? | This is the single clause that decides most disputes |
| Does the letter define a lender failure to fund? | Without a definition, whose fault it was becomes your word against theirs |
| What is the exact funding deadline? | A vague deadline makes it harder to show the lender missed it |
| When is the fee actually due? | Paying before any underwriting work is done increases your risk |
| Was the fee disclosed to me in writing before I signed? | In Ontario this is a requirement under the MBLAA, not a courtesy |
Compare more than one lender’s terms before committing to any one of them, since fee structures and refund language both vary by lender. Our guide to comparing private mortgage offers walks through what else to line up side by side.
The citable fact: the refund terms for a commitment or standby fee should be settled in writing before you pay it, not negotiated after a deal falls through.
Who should look at the paperwork?
A real estate or contract lawyer should read your commitment letter, ideally before you sign it and again if a dispute arises after the fact. A broker can explain how commitment and standby fees typically work and help you compare lenders’ terms, but a broker cannot give you a legal opinion on whether a specific fee is enforceable.
Bring the lawyer everything: the commitment letter, any written fee disclosure, and a written timeline of what happened if the deal did not close. The more complete the file, the more useful the answer.
For the separate question of who pays the lawyer handling the lender’s side of a private mortgage, see our page on who pays lender legal fees. If you are trying to understand the whole process of exiting a private mortgage, including timing your exit around a fee like this one, read our guide to exiting a private mortgage to a lender.
The citable fact: a lawyer reviews whether a commitment fee is enforceable on your specific file, and a broker explains how the fee and the lending process work, and the two roles are not interchangeable.
Where should you look next?
This question connects to a few others worth reading before you pay any fee on a private mortgage file.
The full set lives on the Ask a Broker hub.
Frequently asked questions
Is a mortgage commitment fee the same thing as a deposit?
No. A deposit is money put toward the purchase price of a property, and it is held in trust. A commitment or standby fee is paid to a lender in exchange for a promise to fund on agreed terms by a set date, and it works under different rules entirely.
Can a lender keep a commitment fee if my financing falls through for reasons outside my control?
It depends on what the commitment letter says and on the specific reason the deal did not close. There is no blanket rule in Ontario or Alberta that automatically returns the fee in that situation, which is why the letter’s own wording and a lawyer’s read of it matter so much.
Does Ontario require a written disclosure of a commitment fee before I pay it?
Yes. Under the Mortgage Brokerages, Lenders and Administrators Act, a brokerage must disclose any fee it or the lender charges in writing before you sign, and a commitment or standby fee is a fee for this purpose.
Does Alberta have the same written disclosure requirement?
That has not been confirmed. Alberta mortgage brokerages are licensed by RECA, and whether a RECA rule imposes a written fee disclosure requirement equivalent to Ontario’s is an open legal question this page has flagged rather than answered.
What if my commitment letter does not mention refunds at all?
Silence on refundability does not automatically mean the fee is refundable or that it is not. Bring the letter to a lawyer, since how the situation would be read depends on the rest of the letter’s wording and on provincial law.
Can I get the fee back if the lender changes the terms after I already paid?
A lender changing the agreed terms after taking your fee is a fact worth raising with a lawyer, since it may affect whether the lender delivered what the fee was paid for. It does not automatically create a right to a refund on its own.
Who do I complain to in Ontario if I think a commitment fee was wrongly kept?
Start with the brokerage itself and its own complaint process, which must give you a written response. If your concern involves the brokerage’s compliance with FSRA’s requirements, or you received no written response after trying, you can then file a complaint with FSRA.
Who do I complain to in Alberta?
Complaints about a licensed mortgage brokerage in Alberta go to RECA. No published timeline exists for how long that process takes.
Should I get a lawyer to review the commitment letter before I sign, or only if there is a dispute?
Before you sign is better, since a lawyer can flag vague or one-sided refund language while you can still negotiate it. Reviewing after a dispute arises only tells you where you stand, not how to avoid the problem.
Can a broker tell me whether a specific commitment fee is enforceable?
No. A broker can explain how commitment and standby fees typically work and help you compare lenders’ terms, but only a lawyer can give you an opinion on whether a specific fee is legally enforceable.
Is the chat on this page an AI bot?
No. Chat on pekoe.ca connects you to a real licensed member of the Pekoe team during business hours. Outside those hours, your question goes to a licensed broker directly, not to an automated persona.
What is the difference between FSRA and RECA?
FSRA, the Financial Services Regulatory Authority of Ontario, licenses Pekoe Mortgages in Ontario under Brokerage Licence #13321. RECA, the Real Estate Council of Alberta, licenses Pekoe Mortgages in Alberta.
Think a commitment fee was wrongly kept? Get the letter reviewed before you decide what to do next.
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