June 19, 2024
With the dynamic nature of Ontario’s real estate market, things do not always go as planned from the initial agreement to the final closing. However, it is important to remember that the Agreement of Purchase and Sale is a legally binding contract. This means that there are legal implications for all the parties involved when certain parties choose to withdraw from the agreement. Depending on whether they are the buyer or seller, parties are vulnerable to significant legal and financial consequences. This article will uncover the legal and financial consequences facing sellers who choose to withdraw from real estate contracts as per Ontario real estate law.
Seller’s remorse is a real phenomenon. It happens when the seller believes they made a mistake in selling their home. They may face regret for not making enough money from the sale of their property, missing their old neighbourhood, or simply just regretting the decision to sell in that particular point in time. The court’s response to seller’s remorse is not generally a favourable one and it is not a legally recognized reason for breaching an agreement. In these circumstances, sellers may face legal disputes or financial penalties.
In order to understand legal implications, one needs to understand the legal footing of real estate contracts in Ontario. Upon signing the property sale agreements, both the buyer and sellers are obligated to fulfil the terms outlined in the contract. The primary duty of the seller is transferring the ownership of the property to the buyer by the stated closing date. Further duties of the seller are outlined in the contract for the period of due diligence, from when the contract is signed up until the closing of the property. During this period, the buyer is given an opportunity to conduct an appraisal, a title search, organize their mortgage, perform property inspections. Meanwhile, the seller has the obligation of maintaining the property in the condition it was agreed upon for closing, providing access for inspections, clearing encumbrances, and conducting agreed-upon repairs or modifications on the property before the closing date.
Sellers backing out of an APS face detrimental consequences for contract cancellation. Ontario property law is sincere in upholding its duty of protecting both buyers and sellers’ rights in real estate transactions. During a real estate closing, seller obligations must be upheld to avoid seller penalties. When the seller breaches the agreement, legal recourse is readily available to the buyer. This could involve potential lawsuits for damages, specific performance, losing the deposit, or reimbursement costs involved in the execution of the agreement of purchase and sale. A buyer has the right to seek damages from the seller in courts, where the seller would owe monetary compensation for any losses incurred by the seller’s contract termination. By requesting specific performance, buyers can have the court forcefully order the seller to sell their property in honour of the purchase and sale agreement. Buyers can also have the costs involved in the property purchase process recovered at the expense of the seller if the closing process cannot be completed due to the seller. Such costs include inspection fees, legal fees and moving costs.
The breach of a real estate contract is not immediately sent to court for resolution.
Real estate disputes that occur through contract breach are usually first attempted to be resolved through negotiation between the buyer and seller. There may be a possibility that the parties themselves come to a compromise that prevents the breach of the agreement.
Next, to avoid the time and expense of a court case, the parties may reach a settlement through mediation, where a neutral third party helps to facilitate a mutually agreeable resolution.
Finally, If the conflict fails to be resolved through mediation, parties may decide to proceed with court litigation. This is when courts will intervene and decide the consequences depending on buyer’s rights and seller’s rights outlined in the law and with the consideration of the terms in the agreement of purchase and salw.
To prevent seller’s remorse and the significant legal and financial repercussions that sellers may face in breach of contract, there are some basic steps you can take:
We can help you!
Fortunately, these are all precautions that our legal team at Bradshaw & Mancherjee would be happy to assist you with. Our proficient experience in the field of real estate law means we specialize in protecting both sellers and buyers.
With our meticulous attention to detail, we will review your contract for potential contract contingencies, negotiate terms that safeguard your interests, and represent you in disputes that may arise in the course of your real estate transaction. Bradshaw & Mancherjee offers strategic advice and legal solutions tailored to protect sellers’ interests and navigate complex contractual obligations in Ontario.
By working with our team of professionals, you can make confident real estate decisions every step of the way. For any inquiries you may have or to schedule an appointment with one of our expert legal professionals, please feel free to contact us.
Back