Buying or selling a home in Ottawa can be exciting, but it can also be stressful when a real estate transaction does not close as planned. First-time buyers and sellers can be surprised to learn that once an Agreement of Purchase and Sale becomes firm and all conditions are waived or fulfilled, it is a legally binding contract. If one party cannot or does not complete the transaction, there can be significant financial consequences.
Who pays and how much depends on the specific circumstances of the transaction.
A common example on the buyer’s side occurs when a purchaser cannot obtain financing after a deal becomes firm. Imagine a buyer agrees to purchase a home for $700,000, waives their financing condition, and later learns that the lender will not provide the expected mortgage. If the buyer cannot complete the purchase, they may be at risk to losing their deposit and could be responsible for additional damages suffered by the seller as a result.
An example on the seller’s side occurs when the seller cannot deliver clear title or simply refuses to close. If the buyer suffers financial losses as a result, the seller may be responsible for those losses. Potential damages could include temporary accommodation expenses, moving costs, storage fees or additional financing costs.
If you find yourself in a situation where a deal may be falling apart, the most important step is to act quickly and communicate early. Buyers should immediately speak with their lender, real estate agent, and lawyer if financing or another issue arises. Sellers should notify their lawyer as soon as they become aware of any problem affecting their ability to close.
Solutions can be negotiated, such as extending the closing date or coming to other agreements to avoid litigation.
For first-time buyers and sellers, it is important to remember that not every failed transaction automatically results in a lawsuit. But the legal risks are real.
Every situation is different and the financial consequences can vary widely depending on the facts. If a transaction appears to be in trouble, obtaining legal advice early can help you understand your options, protect your rights, and potentially reduce the costs associated with a failed closing. A proactive approach is often the best way to minimize stress and work toward a practical resolution.
The content on this post is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship.