Its just very rare that this happens and this is mainly paranoia getting into peoples brain that they would need some sort of protection because of some high profile cases that have gone around the internet. 

Hey there, I'm avidly reading about wholesaling in Canada and I was wondering what are the mechanism in place to protect yourself as a the wholesaler if the buyer doesn't come through or if the deal falls off.

Not just STRs.That's why if you've been through the trenches of defending yourself you wouldn't just mock the liability angles of protecting your investments beyond umbrella insurance, you'd know how to form entities and keep things separated appropriately.

Or what does it protect them from?

The MILLIONS of dollars in assistance we acquired for residents to stay current during covid, protecting both them and our trusted owners from financial hardship. 5.

It protects their investment. 

And once you've got an approved applicant, then you present them with your lease, which needs to be comprehensive in its protection for you and of your property (mine is 24 pages and counting as I encounter new issues, and it contains fines for certain violations) - check your state laws.

The collateral is all you have left, and you must protect it.

All of the risks of "subject to" then come into play (with a "wrap"); read this thread:http://www.biggerpockets.com/forums/83/topics/86029-subject-2-protection-from-calling-mortgage-due

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings.