For many reasons, an agreement of purchase and sale to buy real estate may be breached by either the seller or the purchaser. The innocent party may be entitled to significant compensation.
For instance, in the recent Ontario Court of Appeal (ONCA) decision, Rosehaven Homes Limited v. Aluko, 2022 ONCA 817, the ONCA upheld a lower court decision granting summary judgment requiring the appellants to pay damages to the respondent arising from the appellants’ failure to complete an agreement of purchase and sale for the purchase of a home.
In that case, the appellants were unable to complete the transaction because they could not obtain sufficient financing. However, the agreement was not conditional on them obtaining financing.
The respondent ultimately sold the property at a loss (compared to the sale price agreed to between the parties).
The lower court awarded $331,922.27 to the respondent (being the difference between the original sale price and the resale price, plus carrying costs, less a credit for the deposits and the cost of upgrades), and the ONCA upheld that decision.
Failure to obtain sufficient financing is but one of many situations in which a real estate transaction does not close. As mentioned, the innocent party typically will have recourse to the courts for any damages that they sustain as a result.
N.B. There is a 2-year limitation period for innocent parties to a failed real estate transaction to commence a lawsuit. Failure to commence proceedings on time is a complete bar to obtaining any relief from the courts.
At Gilbertson Davis LLP, our lawyers can assist you in your real estate dispute, whether you are a buyer or seller, and whether you require assistance commencing a lawsuit or defending against one. Gilbertson Davis LLP lawyers have experience in proceedings involving Real Estate Litigation, Contract Litigation, Commercial Litigation, and Civil Litigation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Our mission is to provide creative, sensible, cost-effective, long-term resolutions to clients. Please contact Gilbertson Davis LLP to schedule a consultation.
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