A signed deal that collapses on closing day is one of the most common real estate disputes in Ontario, and it becomes more common whenever prices move between the date an offer is accepted and the date set for closing. If your buyer did not complete, these are the questions that decide whether you have a claim worth pursuing.
Four things need to line up
1. A firm agreement. If the buyer’s offer was still conditional, for example on financing or an inspection, and the buyer properly relied on that condition in time, there is usually no breach. If every condition was waived or satisfied, the agreement was firm and the buyer was bound to close.
2. You were ready, willing and able to close. Courts ask whether you could have completed on the closing date. Keep the proof: your real estate lawyer’s correspondence, the arrangements to discharge your own mortgage, and anything showing you could deliver clear title on time.
3. The buyer failed to close without a lawful excuse. A buyer who simply could not obtain a mortgage is still in breach. Once the deal is firm, financing is the buyer’s risk.
4. You suffered a loss. The usual measure is the difference between the agreed price and the property’s value when the deal failed, which in practice is often shown by the price on a reasonable resale, plus carrying costs such as mortgage interest, property taxes, insurance and utilities while the property was resold.
How the deposit works
The deposit often causes confusion in both directions.
- If you resell with no loss, a true deposit is generally forfeited to you. It secured the buyer’s promise to close, and the buyer broke that promise.
- If you did suffer a loss, the deposit is credited against your damages rather than added on top of them.
- The deposit usually sits in the listing brokerage’s trust account. It is released only on a mutual release signed by both sides or by court order. The brokerage will not simply hand it over.
You must try to limit the loss
A seller has a duty to mitigate. In practice that means relisting within a reasonable time, at a sensible price, and accepting a reasonable offer. Courts look closely at the resale: how quickly the property was relisted, the asking price, and the offers received. Keep a clear record of the listing agreement, showings, offers and your agent’s advice.
Where the claim goes
Smaller claims for money can be brought in Small Claims Court, which is faster and less formal. Larger claims proceed in the Superior Court of Justice, where a simplified procedure applies to claims up to a set amount. The right forum depends on the size of the loss and the evidence involved.
What to gather now
Start a file with the agreement of purchase and sale and every amendment, all messages about the failed closing, your real estate lawyer’s closing correspondence, the deposit records, the relisting and resale documents, and a running list of carrying costs with receipts. Failed closing claims are usually won on documents, not memory.