In the recent decision of the Ontario Court of Appeal (“ONCA”), Nguyen v. Zaza, 2023 ONCA 34, the ONCA dismissed the appellant’s appeal from a decision of a judge of the Ontario Superior Court of Justice to grant the respondent’s summary judgment motion and order forfeiture of the appellant’s deposit of $50,000 to the respondent (among other relief).
The appellant was the purchaser and the respondent was the seller of the subject property.
The agreement of purchase and sale at the center of the dispute between the parties specifically indicated that time was of the essence.
Originally, the agreement was conditional on the appellant arranging financing and a satisfactory home inspection, but the appellant waived those conditions prior to closing.
The motion judge found that on the closing date the respondent was ready, willing, and able, to close whereas the appellant did not tender the purchase price required from her for closing.
The ONCA opined that a seller is entitled to refuse an extension of time to close where a buyer does not have sufficient financing to close. Further, the ONCA upheld the motion judge’s conclusion that a deposit is intended as security for the purchaser’s performance, and absent a specific term in the agreement of purchase and sale regarding the disposition of the deposit, the deposit is forfeited to the seller if the purchaser fails to close.
The appellant made other arguments alleging that the motion judge’s reasons for decision were insufficient and alleging that the seller was not entitled to require her to complete the agreement of purchase and sale on the closing date because title to the subject property was in the name of someone else (the seller’s father) at the time the agreement of purchase and sale was signed. These arguments were also rejected by the ONCA.
The appellant was ordered to pay the respondents’ costs of appeal.
This case should be a caution to prospective purchasers of real property to ensure that they have the requisite financing in place on the date of closing of the transaction. The seller may not agree to provide an extension, and failure by a purchaser to provide payment of the purchase price on time may result in a lawsuit against them for forfeiture of the deposit, among other relief.
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