QUICK HITS

• The developer’s attempt to add nearly $60,000 in extra fees beyond the APS terms was determined to be a breach of contract.
• Courts ruled that sellers must provide clear documentation and justification for any additional charges listed in statements of adjustments.
• Because the seller breached the APS, buyers were entitled to recover their deposit and upgrade payments
• Because the buyers took possession of the property for at least a year, the buyers were found responsible for paying fees totalling $68,000 to compensate the seller for the time they lived there.

In litigation arising from disputed real estate transactions, courts are frequently confronted with circumstances where a buyer tries to close for less than the agreed sale price.

In many cases where a buyer tries to close for less than the price agreed to by the parties, the buyer is the party in default, and the seller is entitled to retain the deposit paid in addition to seeking other damages from the buyer.

In some cases, however, a failure to close may be due to additional unanticipated charges imposed by the seller on top of the original agreed-upon price. A seller’s demand for more than the agreed purchase price is just as much a default as a buyer’s demand to pay less. Whether or not such charges are permitted is generally determined by the wording of the Agreement of Purchase and Sale (APS) between the parties.

Taheripouresfahani v. Dormer Bond Inc., 2025 ONSC 5833 (CanLII) arose from a dispute between the buyers and the developer/seller of a newly built property in Richmond Hill, Ont.

The purchase and disputed charges

In 2020, the buyers entered into an APS with the developer for the purchase of the property for $761,490. The buyers paid installments of more than $114,000 as a deposit and $11,540 for additional upgrades. The final closing date was to be designated by the developer’s lawyer upon at least 14 days’ notice.

Pursuant to the terms of the APS, the buyers were allowed to move into the property before the final closing date once occupancy was permitted. In April 2023, the buyers moved into the property as permitted and began to make monthly occupancy payments of $3,782.

On July 31, 2023, the developer delivered a notice scheduling the closing date of Sept. 15, 2023.

On Sept. 7, 2023, the developer delivered a Statement of Adjustments to the buyers’ lawyer, which included additional charges totaling almost $60,000. The charges were stated to be for:

• Development charges/increased levies: $8,000 plus HST
• Meters (hydro/gas): $8,163 plus HST
• Vendor’s legal and administrative fees: $8,605 plus HST
• Alternative materials cost: $27,021.08 plus HST

A flurry of correspondence ensued between the lawyers over whether or not the charges were permitted under the APS. The developer offered to reduce some of the charges but demanded a mutual release in return. The buyers refused and demanded that all the additional charges be removed. The transaction was not completed by the Sept. 15, 2023 closing date, but the lawyers continued to exchange correspondence in the following days concerning the statement of adjustments and additional charges.

On Sept. 26, 2023, the developer’s lawyer confirmed that the transaction had been terminated. The developer demanded that the buyers vacate the property.

Court finds sellers in breach

Litigation ensued, with each party moving for summary judgment.

The motion judge noted that a buyer is generally entitled to proof of figures contained in a statement of adjustments: Bellisario et al v. 2200 Bromsgrove Development Inc., 2025 ONSC 2546, at paragraph 61.

The motion judge further noted that the APS specifically stated that the balance due on closing would be adjusted to include “any development, education, park or other levies or imposed charges or taxes by Government Authority”. Accordingly, while the development charge of $8,000 was potentially allowed by the APS, the developer had an obligation to explain how the charge was calculated. The developer had failed to provide any evidence to substantiate the charge, referring only to an unexplained “formula” used by the municipality.

Further, while the APS permitted adjustments for the cost of hydro and gas meter installation, the developer did not provide any documents to the buyers or the court on the motion to demonstrate how the amounts were determined.

A similar issue arose regarding the legal and administrative fees. While the APS provided such fees to be added to the statement of adjustments under specific conditions relating to NSF or “stop-payment” cheques, these did not apply in this case.

Lastly, the motion judge found that none of the “alternative materials cost” charges were provided for in the APS and that there was no evidence to support the amount charged by the developer.

The motion judge concluded that it was not the buyers who breached the APS but the developer who tried to close for more than the agreed-upon price in the APS by adding approximately $60,000 in charges that were either unjustified or not authorized. The developer’s attempt to claim any one of these charges was a violation of the APS.

As a matter of law, the motion judge determined that the demand for additional payment as a condition of closing was an anticipatory breach of contract based on the principles discussed by the Court of Appeal for Ontario in Spirent Communications of Ottawa Limited v. Quake Technologies (Canada) Inc., 2008 ONCA 92, at paragraph 37.

The motion judge decided that buyers were therefore entitled to the return of their deposit and amounts paid for upgrades to the property.

Buyer’s occupancy and financial responsibility

While that result would have ordinarily been determinative of the dispute, the case was unusual due to the fact that the buyers had taken possession of the property in April 2023 and resided in it for at least a year thereafter. By the time of the hearing in 2025, they still had furniture in the property and continued to pay for internet and security cameras. The buyers also refused to consent to an order of possession in favour of the developer. The motion judge found the buyers’ refusal to pay the developer for their possession of the property to be an untenable position.

In the result, therefore, the buyers were found to be responsible for the monthly occupancy of $3,782 up to the date of the decision in October 2025 (totaling $68,076), as well as for reimbursement of property taxes of $6,586.56 paid by the developer during that period and unpaid condominium fees of $3,882.

Costs of the litigation based on the divided success of the summary judgment motions are to be determined.

The decision demonstrates that sellers seeking to impose additional charges on the agreed-upon purchase price will need to ground such charges in the specific terms of the APS and have an obligation to provide satisfactory back-up documentation to substantiate the charges. Buyers who take possession of a property before closing should be prepared to compensate a seller for their time in possession of the property before it is re-sold to another buyer.

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Buyers win after developer tries to up the price by $60,000 at closing appeared first on REM.

QUICK HITS

• Buyer refused $1.8-million farm purchase, alleging unlicensed gas wells breached environmental warranty in APS.
  
• The court ruled the warranty covered environmental matters, not gas wells; seller was entitled to $250,000 deposit plus damages.
  
• Real estate agent’s sloppy paperwork led to RECO warning, but conduct did not constitute legal negligence, the judge decided.
  
• Case highlights the distinction between professional conduct rules and negligence law; imperfect work isn’t always actionable negligence.

In disputes between a buyer and seller arising from an aborted transaction, the real estate professionals involved may be dragged into the dispute for their roles in the circumstances at issue. 

Real estate agents have a duty to act in accordance with the applicable standard of care and may be liable for damages when their conduct fails to meet this requirement. However, conduct may be imperfect or sloppy without amounting to negligence, as demonstrated by the trial decision in Duad Inc. v. Shi, 2025 ONSC 5258 (CanLII).

Failed farm sale

The litigation arose from the aborted sale of a farm property in Hamilton, Ont., which the buyer had agreed to purchase for $1.8 million pursuant to the terms of an “as is, where is” Agreement of Purchase and Sale (“APS”). The buyer claimed that two gas wells located on the property were not licenced and could not be legally operated. The buyer refused to complete the purchase, taking the position that the seller had breached an environmental warranty in the APS.

The seller sued the buyer for forfeiture of the deposit of $250,000 and consequential damages. The seller’s position was that the environmental warranty in the APS did not cover the gas wells and that the buyer was simply looking for an excuse to refuse to complete the transaction. Even after the transaction failed to close, the seller offered to address any issues with the gas wells, but the buyer refused to revive the deal.

Disputes involving the agent

The buyer and the seller also sued the real estate brokerage and agent, who had represented both parties in the transaction. The buyer claimed that the agent breached his duties as a Realtor by failing to follow instructions in respect of the wording of the APS and failing to disclose that he was also the agent for the seller, whose interests the agent was alleged to have preferred. Among other things, the buyer claimed that the agent inserted the “as it is, where it is” clause without his consent and misled him about the status of the wells. In turn, the seller sought contribution and indemnity from the agent for any liability to the buyer.

At trial, the court found in favour of the seller. The trial judge reviewed the wording of the warranty and found that it was intended to address “environmental matters” and not the gas wells. Immediately below the environmental warranty in the APS was a clause obliging the seller “To terminate all free use of well gas for neighbor houses”. Below this clause, both sides agreed that the property would be sold “as it is, where it is”.

While there was a specific term in the APS that addressed disconnecting gas to the neighbouring properties, there was no reference in the environmental warranty to the gas wells. Further, in the trial judge’s view, there was no evidence that the seller had breached any warranty regarding the state of the gas wells.

The seller was therefore entitled to the deposit and was awarded consequential damages relating to the costs of $287,296.57 incurred before re-selling the property, to which the deposit would be credited. The seller did not incur a loss from having to sell the property at a lower price, but rather incurred significant costs to carry and maintain the property before the resale.

Regulatory warning

As for the claim against the real estate agent, the trial judge noted that the agent had been subject to a disciplinary warning decision by the Real Estate Council of Ontario (RECO), arising from the transaction. RECO found that the agent erroneously used outdated forms from a previous transaction of the subject property to produce the offer, and he had forgotten to delete a name from an earlier Confirmation and Co-operation form, which he had used as a precedent. The warning also noted that while the brokerage was identified as both the listing and the co-operating brokerage in the APS, he failed to provide a written disclosure of the nature of his relationship to each party prior to the offer.

This did not amount to negligence, however. The trial judge accepted the opinion of a standard of care expert for the agent, who opined that the RECO decision was essentially a “slap on the wrist” for sloppy paperwork.

In the circumstances, there was no indication that the buyer was misled by the agent’s role in representing both parties to the transaction, and the buyer failed to substantiate his claims concerning the terms in the APS. Among other things, the court noted that the buyer continued to work with the agent to try to complete the deal after it initially failed to close. In the trial judge’s view, the agent’s conduct, “while clearly imperfect, did not fall below the relevant standard of care.”

The difference between sloppiness and negligence 

The trial judge referred to Charter-York Ltd v. Hurst (1978) 2 R.P.R 272 (Ont. H.C.), where a vendor’s real estate agent incorrectly advised a purchaser that the acreage being sold was contiguous. The purchaser was allowed out of the transaction, and the agent was liable to the vendor for the loss of an opportunity to sell the land prior to a decline in market value caused by the introduction of land speculation legislation. The misrepresentation in that case was a consequence of the agent’s failure to make adequate inquiries about the land. The buyer failed to establish that the agent in this matter had breached the standard of care by failing to make any required inquiries about the farm property when acting for the parties.

Of note, the issue of the gas well licences was only raised by the buyer for the first time at closing, which supported the agent’s position that the buyer either did not have the funds to close or he had a change of heart about the purchase. Further, the buyer did not adduce any expert evidence that the agent fell below the standard of care required of a Realtor to refute the expert evidence that the agent fulfilled his duty to his respective clients.  There was no indication that the buyer was misled by the agent’s role. The agent tried to make the deal work for both parties, preparing four amendments to the original APS.

The claims of the buyer and seller against the agent were therefore dismissed.

The case underscores the fact that imperfect or sloppy conduct may not amount to professional negligence, even where a formal regulatory warning has been made. The Supreme Court of Canada has affirmed that there is an important distinction between the rules governing professional conduct and the law of negligence as breach of one does not necessarily involve breach of the other: Galambos v. Perez, 2009 SCC 48, at paragraph 29. What could have been a narrow dispute between a buyer and seller over a deposit was complicated by the additional claims made against the professional involved, which may result in cost consequences for the parties who pursued those allegations through trial. 

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Agent’s work was sloppy – but not negligent, Ontario judge rules appeared first on REM.

QUICK HITS:

• The seller told the buyers that there were multiple competing offers. In reality, no other written offers existed.
• The court found that the buyers were wrongfully induced to overpay for the property due to the seller’s misrepresentations. They were awarded damages based on the loss of a chance to negotiate a fair price uninfluenced by false claims.
• The Divisional Court upheld that only signed, written offers are valid under the Statute of Frauds and Real Estate Business Brokers Act, 2002, and dismissed the appeal. It clarified that oral “puffery” or expressions of interest do not count as registered or legally binding offers.

In order to drive up the sale price for a property, sellers may be inclined to raise the spectre of other potential buyers who are waiting in the wings to snap up the property. In heated markets, there may even be bidding wars that require potential buyers to formally register their offers with the seller’s agent. 

In situations involving multiple offers, excited buyers may end up agreeing to pay considerably more than they otherwise would have. If it turns out that there weren’t other offers being made, contrary to what a buyer was led to believe, the buyer may understandably feel that they were wrongfully induced to overpay.

The Ontario Divisional Court decision in Tran v. Brickman, 2025 ONSC 4341 (CanLII), arose from a decision involving a misrepresentation about competing offers being made for a residential property owned by an experienced real estate agent. 

Initially, the seller tried to sell the property for $1.5 million in February 2020. The plaintiff buyers offered $1.25 million at that time. The seller delisted the house because she could not get her desired price.

The seller then relisted the house in March of 2020 at $1.25 million. She claimed that she undervalued the house, hoping to create a bidding war.

Seller claims she had multiple offers

Early on, the plaintiffs’ agent told the seller that they might be willing to go up to $1.3 million, but that they were straining at the top of their budget to get there.

The sale price was negotiated via text messages between the plaintiffs’ real estate agent and the seller. During the exchange, the seller made several statements concerning other offers she said that she had received:

• She had “two other registered offers for tonight”;
• She had “2 [offers] besides [the plaintiffs’];
• One offer had “just dropped”;
• “Two other agents that say the same [as the plaintiffs’ agent]”;
• Another agent told her that a party was going to “improve their offer.”;
• The offer from the plaintiffs and that other offer “are very close”;
• She had a “current offer until 11 p.m.” that night that she may accept if she did not hear from the plaintiffs; and
• The plaintiffs’ offer was “a lot less” than another offer she had received

The plaintiffs ultimately bid $1.305 million for the property, which was accepted by the seller.

Buyers learn about false bidding war

After the transaction was completed, the plaintiffs learned that there were no other registered offers as claimed. They sued the seller for the amount they claimed to have overpaid.

The seller denied liability, arguing that she had no intention of selling the property for less than $1.35 million, and that any discussion of competing offers occurred after she had received the plaintiffs’ offer for $1.3 million. She also claimed that the plaintiffs’ agent was aware that any other offers received were not “written offers” since she had not stated they were.

Judge finds buyers were misled

In the trial judge’s view, the overall impression left by the seller’s text messages was that the plaintiffs were competing for the purchase of the property with other buyers who had made “registered” offers.

Further, the seller’s representation that she had an offer that she could accept until 11 p.m. that night unless the plaintiffs increased their bid was false. The trial judge found that there were no offers received in writing by the seller and therefore no offer capable of acceptance in law (whether described as “registered” or not).

The trial judge found that the plaintiffs were induced by the seller’s misrepresentations concerning competing offers to increase the amount they agreed to pay for the property.

Calculating the damages

The measure of damages was based upon the plaintiffs’ loss of a chance based upon the Court of Appeal for Ontario’s decision in Folland v. Reardon, 2005 CanLII 1403 (ON CA). In the case at hand, the loss of chance was the opportunity to negotiate a fair price uninfluenced by the seller’s “false portrait of what competition they faced”.

The plaintiffs argued that they should have been able to purchase the property for the listing price of $1.25 million. The seller argued that the plaintiffs had communicated via their agent that they were willing to go up to $1.3 million, so the damages should only be the additional $5,000 that they agreed to pay.

The trial judge seemingly split the difference by concluding that the plaintiffs lost a real and substantial chance to negotiate a final price at the midpoint between $1.25 million and the sale price of $1.305 million. Damages were awarded based on this calculation.

Appeal dismissed

On appeal, the seller argued that the trial judge erred in failing to find that the offers were “registered offers” and erroneously classifying them as “phantom offers.”

The Divisional Court noted, however, that as a matter of law, an offer that is capable of being accepted must be signed and in writing, whether made by express notice or “registered”.

The appellate court agreed with the trial judge that there were no written offers capable of acceptance received by the seller because there were no offers made in writing as required in Ontario by the Statute of Frauds, Real Estate Business Brokers’ Act, 2002, and the common law. 

While it may be industry standard for agents to exchange informal verbal offers in advance of the formal presentation, the appellate court noted that this was irrelevant as to whether the plaintiffs were induced by the misrepresentations in this case.

The Divisional Court expressly disagreed with the seller’s argument that a “registered” offer simply meant that there were interested parties. In the Court’s words, “Oral puffery is not a registered offer or an offer capable of acceptance or presentation”.

As for damages, the Divisional Court agreed with the seller that it would have been an error to simply split the difference between the parties’ positions. However, there was a principled basis for the trial judge’s decision to do so. 

The trial judge had rejected the seller’s evidence that $1.305 million was her hard minimum because he rejected her credibility as a witness. Had the misrepresentations not been made, there would have been a fair back and forth, not infused by unlawful conduct. A finding of $28,600, or the midpoint between bid and ask, was a reasonable view of the likely outcome given the parties’ proven positions and was a “just and agreeable” outcome to the dispute. The appeal was therefore dismissed.

The decision demonstrates that sellers should take care with any representations made during the bidding process that influence the buyers into increasing their offer. In some jurisdictions, during heated markets, properties may have multiple formal offers that are registered. Any representations made by the seller as to the number of offers and terms may be subject to scrutiny after the transaction is completed. 

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Ontario seller found liable for misleading buyers about competing offers appeared first on REM.

• When a real estate deal in Bowmanville, Ont. fell apart, neither the buyer nor the sellers were ready to close on the extended date, and no one took formal steps to keep the deal alive. 
• The court ruled that since key conditions like a lease weren’t met and both sides dropped the ball, the agreement was effectively abandoned.
• As a result, the buyer got their $175,000 deposit back.

In disputes arising from an incomplete real estate transaction, the courts will generally focus on which party is responsible for breaching the terms of their agreement. 

In some cases, however, neither party will have been ready to complete the transaction on the scheduled closing date. The resolution of their dispute will then turn on what steps the parties took after the closing date, if any.

In Nieuwenhuis v. FRP Inc., 2025 ONSC 4275 (CanLII), litigation between the parties arose after the incomplete sale of a property in Bowmanville, Ontario.

In June 2017, the potential buyer contacted the owners and inquired if they were interested in selling the property. The owners advised that they would consider doing so, depending on the price. The parties then agreed to the terms of a letter of intent which specified a purchase price of $3 million, and a term that permitted the sellers to continue to reside in the property for two years after the completion of the sale.

Agreement drafted by a lawyer

Because the buyer had not retained legal counsel, the parties agreed that the sellers’ lawyer would prepare an Agreement of Purchase and Sale (APS), based on the letter of intent. The parties met at the offices of the sellers’ lawyer in August 2017 and executed the APS. The APS required a deposit of $175,000 payable to the sellers’ lawyer and was scheduled to close on Sept. 29, 2017.

The APS was conditional for three banking days upon the approval of its terms by the sellers’ lawyer. The approval condition stated that unless notice was given that the condition had been fulfilled, the APS would be null and void. No notice of fulfilment or waiver of the condition was ever provided.

The APS was also conditional on the parties entering into a lease agreement entitling the sellers to the exclusive use, occupation and enjoyment of the residence located on the property for two years following closing.

‘Is there actually an agreement?’

A term in the APS entitled “Time Limits” provided that time shall be of the essence unless extended or abridged by an agreement in writing signed by the parties or their lawyers.

On Sept. 17, 2017, the parties agreed to extend the closing to Oct. 6, 2017.

In an email dated Oct. 3, 2017, the buyer’s lawyer requested that the sellers agree to a vendor take-back mortgage (VTB). The sellers’ lawyer responded the following day to decline this request. 

The buyer’s lawyer then suggested a 30 to 60-day extension to allow the buyer to arrange financing. 

The buyer’s lawyer also noted that the APS was conditional on a residential lease being signed and that some time would be required to negotiate the terms of the lease satisfactorily to both parties. A lease had not been prepared.

The transaction did not close on Oct. 6, 2017. Neither party tendered. No amendment to extend the closing date was signed. In one email, the buyer’s lawyer inquired, “Is there actually a live agreement between these guys?”

Failure to revive the deal

On Oct. 23, 2017, the buyer’s lawyer wrote to the sellers with some suggestions for terms that would allow the transaction to continue. He also suggested that if terms could not be agreed upon, they could accept that an impasse had been reached and the deposit returned. The sellers’ lawyer said that he would review the matter with them and advise.

While the parties met occasionally to discuss the transaction, in September 2018, the buyer requested the return of the deposit. Emails were exchanged between the lawyers about whether the deposit would continue to be held in trust by the lawyers or paid into court. No agreement was reached. A new APS was prepared in 2018 but never signed.

Sellers offload property, and litigation ensues

In November 2020, the sellers sold the property to another buyer for $1.3 million.

In the litigation that ensued, the parties moved for summary judgment against each other. The buyer sought the return of the deposit while the sellers sought damages for the buyer’s failure to complete the transaction for the agreed-upon price.

The sellers argued that the reason for the buyer failing to close the transaction was its inability to obtain financing.

In contrast, the buyer’s position was that the APS had become null and void because the extended completion date, Oct. 6, 2017, passed with neither party tendering. The buyer also contended that the APS was subject to a lawyer’s approval and a leasing condition, neither of which were ever fulfilled or waived.

Regarding the lawyer approval condition, the motion judge noted that it was in the best interest of the sellers. Although no formal written waiver of the approval condition was given, it was implicitly waived when the parties agreed on Sept. 17 to extend the closing date to Oct. 6, 2017. In that regard, it made no sense for the sellers to sign an amendment to the APS to extend the closing date if it was null and void.

With regard to the lease condition, however, it was important to both parties, since the sellers needed to be able to reside in the property, and the buyer needed to develop a plan to clean it up. The lease condition was never satisfied.

Neither party was prepared to complete the sale, judge finds

Importantly, the motion judge found that as of the extended date for completion of the transaction in October 2017, neither party was in a position to complete the transaction. The sellers had not prepared a transfer, the buyer did not have sufficient funds, and neither party had prepared a draft lease. Neither party tendered. While emails were exchanged about extending the closing date, there was no written agreement doing so.

Deposit returned to buyer

The motion judge concluded that the APS was abandoned and became null and void. Accordingly, the sellers were not entitled to damages because the buyer did not breach the contract. The buyer was entitled to the return of the deposit.

The case affirms that if a party to an APS wishes to reinstate a new date for completing a transaction, they must serve notice to the other party, fixing a new reasonable date for closing with time being of the essence. The failure to do so will generally result in the APS being at an end, and the deposit returned to the buyer. 

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post If neither party is ready to close, who’s on the hook for the failed deal? appeared first on REM.

QUICK HITS

• The seller misrepresented the $6.2-million property by failing to disclose a known unpermitted addition.
• The buyer relied on the incomplete disclosure statement, which was part of the contract.
• The Court of Appeal reversed the trial decision and ordered the $300,000 deposit returned to the buyer.

In disputes where a buyer alleges that a seller misrepresented the property being purchased, courts will generally focus on whether the representations were contained in the contract for the transaction or were otherwise reasonably relied upon by the buyer. 

Sellers should ensure the accuracy of any representations about a property in the listing or other disclosure documents. In some cases, incomplete or omitted information may give rise to liability.

Buyers’ due diligence

In Sewell v. Abadian, 2025 BCCA 158 (CanLII), the Court of Appeal for British Columbia addressed a seller’s liability for the contents of a written disclosure statement about a property.

The buyer agreed to purchase the property for $6.2 million with a $500,000 deposit paid in installments of $300,000 and $200,000. 

Before entering into the contract, the buyer requested that the seller provide a written disclosure statement in the standard form used in British Columbia. 

The seller did so but drew a diagonal line through the form, did not complete answers for any boxes, and wrote in an additional comments section: “Tenanted Property, Owner has never occupied.”

Critical message not delivered

The buyer was surprised that a line was drawn through the form and that none of the questions were answered. Through her agent, she requested more information, including whether any repairs had been made to the property.

The seller provided information to his agent via text message, including a statement at the end, “Not sure if we have to mentioned [sic] but the tiled family room is/was an addition not by me. It’s unauthorized accommodation.”

The seller forwarded the text message to the buyer’s agent, but as the text message was compressed on the recipient agent’s phone, he did not see the statement about the addition. As a result, the buyer’s agent did not see or convey any message to the buyer about the family room or a potentially unauthorized addition.

Trial judge found no wrongdoing

After paying the first $300,000 deposit, the buyer discovered the unpermitted addition while reviewing building plans for the home and refused to close the transaction.

Litigation ensued. The buyer sued for the return of her initial deposit and the seller counterclaimed for delivery of the second deposit. One basis of the buyer’s claim was that the seller made a negligent or fraudulent misrepresentation in the disclosure statement.

The trial judge found that the seller did not make any misrepresentations: Sewell v. Abadian, 2024 BCSC 1116 (CanLII).

In the trial judge’s view, the fact that the seller crossed out the disclosure form and did not provide any answers meant the only representation he was making was that the property was tenanted and he had never occupied it.

Decision overturned

The Court of Appeal disagreed that this was the only reasonable interpretation. The appellate court noted that the transaction was not an “as is” sale and that the statement “Tenanted Property, Owner has never occupied” must be read together with the seller’s refusal to answer any of the standard questions.

The Court of Appeal determined that the lower court judge erroneously concluded that there was no misrepresentation by the seller, and the decision failed to take into account the following circumstances:

• The seller was experienced in real estate sales, including as a prior licensed realtor, and knew the importance of filling out a disclosure statement accurately;
  • a)   the seller knew that a disclosure statement he had received from a prior owner of the property disclosed the unpermitted addition in two places;
  • The seller had a choice of not providing a disclosure statement and saying nothing but instead chose to provide one and to agree that it would be incorporated into the contract;
  • The disclosure form specifically stated that the seller was responsible for the accuracy of the answers and where uncertain should reply “do not know”;
  • The disclosure statement also stated that the information provided was true, based on the seller’s current actual knowledge, and that any important changes to this information made known to the seller would be disclosed prior to closing;
  • The additional comments about it being a “tenanted “property” and “owner has never occupied” were not responsive to the questions on the form asking for information about the property.

The Court of Appeal concluded that the above evidence ought to have been considered by the judge when he considered whether the seller made a misrepresentation on the form.

Buyer was entitled to complete disclosure

Although the seller did not fill out boxes on the form to specifically answer “Do Not Know,” this did not mean that he was not claiming he did not know the answers to relevant questions. 

Rather, in the Court of Appeal’s view, the seller was representing within the overall context of the form that he did not know of any unpermitted additions. Since he was aware there was an unpermitted addition on the property, this was a misrepresentation. Whether it was a negligent or fraudulent misrepresentation “does not matter in this case.”

There was also no question that the buyer relied on the form. The evidence was that she did not learn about the unauthorized addition before entering into the contract. The seller agreed that the buyer could rely on the disclosure statement by incorporating it into the contract. The buyer relied on the seller to disclose everything he knew about the property and thought that the seller was indicating that he was unaware of the answers to the questions that were crossed out. In the Court of Appeal’s view, it was not open to the seller to say that the buyer did not rely on it.

The buyer would not have entered into the contract if the seller had not misrepresented his knowledge about the unpermitted addition. The buyer was entitled to and did rely on the seller being accurate and complete in the disclosure statement. He was not.

Accordingly, the trial judge’s order was set aside and the buyer was entitled to recover the amount of the initial deposit of $300,000.

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post B.C. buyer awarded $300,000 deposit after seller’s disclosure misstep appeared first on REM.

QUICK HITS

• Several Ontario homebuyers challenged a developer’s attempt to add tens of thousands of dollars in surprise utility-related charges just before closing, arguing those costs weren’t clearly allowed in their contracts. 
• The court agreed, finding that the Agreement of Purchase and Sale only permitted charges for certain utility costs paid directly to municipalities or utility providers, not to private contractors. 

Over the past few years, there have been several media reports of developers in Ontario attempting to levy charges against buyers for various matters that were not included in the original purchase price. 

Such issues may arise during the process of construction or at the time of closing, and buyers may be left feeling that they have no choice but to agree to the charges or lose their deposit. 

Whether a seller is legally entitled to demand additional payments from a buyer generally comes down to the wording of the Agreement of Purchase and Sale (APS).

Buyers challenges surprise closing costs

In Bellisario v. 2200 Bromsgrove Development Inc., several buyers of units in a townhouse complex challenged a developer’s attempt to charge them certain adjustment amounts on closing. The buyers had entered into their respective APSs for amounts varying from $400,000 to $700,000 before the units were constructed.

In the APSs, there were provisions for adjustments to the purchase price related to matters, including utilities, to be calculated and paid as of the closing date. A few days before closing, the developer delivered final statements of adjustment that included alleged “Utility Meter Installation Charges” for electrical, gas, water/sanitary and permits/fees. 

These charges also covered amounts paid to various contractors and trades for work on utilities, construction management, and landscaping. In some cases, the additional charges were as high as $86,000.

In response to one buyer’s request for evidence, the developer provided a “Certificate” outlining costs reflected in the statement of adjustments. The certificate included only total amounts under various subheadings for the entire project, which were then divided among the buyers based on their proportionate share.

The buyers closed the transactions but challenged the developer’s position afterward.

What the contract actually said

The clause at issue in the APS stated that the developer was entitled to reimbursement for:

1. the cost of any water and water check/sub meter costs, installation and connection charges and hydro and gas/BTU check/sub meter costs, installation and connection charges; and
2. a proportionate share of all electricity, gas, water, sanitary, drain and sewer infrastructure, installation, connection and energization costs (or security relating thereto) paid by the Vendor to or deposited by the Vendor with the Municipality or utility service provider.
   

Differing views on interpretation

The developer argued that the above term permitted it to charge the buyers for all costs associated with the engineering, installation, and connection of the necessary utility services, irrespective of who such amounts were paid to. Such costs were unknown at the time that the parties entered into the APSs. While the term expressly referenced the developer’s ability to pass along amounts paid to a “Municipality or a utility service provider”, the developer argued that the term “utility service providers” was not defined and therefore included third-party contractors and trades.

The buyers’ position was that the developer was attempting to recoup costs that it should have borne as part of the overall infrastructure development costs and that these costs could not be passed on to individual buyers at the time of closing. The buyers argued that there was no basis to interpret “utility service provider” to include trades and others paid by the developer in respect of the utility infrastructure costs.

The judge applied general principles of contract interpretation, such as avoiding unjust or unreasonable results, and resolving ambiguities in favour of the party that didn’t draft the contract.

In the application judge’s view, the plain and ordinary meaning of the words in the APS term at issue supported the buyers’ position. The APS provided that the developer was permitted to charge buyers for the cost of installing meters for the services in their respective units, but this did not include infrastructure and energization costs. The APS did not provide the developer with the right to charge for matters that related to the utility infrastructure if these amounts were not paid to the municipality or to utility service providers. There was no ambiguity in that regard, but even if there was, it ought to be resolved in the buyers’ favour.

The developer argued that the buyers had agreed to amounts in the certificate and that the APSs provided that the Certificate shall “constitute sufficient evidence” for the purpose of calculating the adjustments. However, the application judge noted that “evidence” can always be challenged or rebutted with other evidence and this did not mean that the Certificate was conclusively binding.

Further, the application judge was satisfied that the Statement of Adjustments and Certificates provided by the developer were misleading and amounted to bad faith, such that it would be inequitable to permit the developer to rely upon a Certificate that included charges that it was not entitled to pass on to the buyers. 

Lastly, the developer attempted to rely on a limitation of liability clause in the APS which purported to limit a buyer’s remedies to return of the deposit. The application judge found the limitation clause to be inapplicable for several reasons, including an overriding public policy interest in preventing developers from escaping liability “where they secretly and not transparently charge for amounts to which they are not entitled”.

Court sides with buyers

The court concluded that the developer could only charge for meter installations and infrastructure costs paid to municipalities or utility providers. A further hearing was ordered to determine what amounts, if any, should be reimbursed to buyers.

This case illustrates that buyers may have recourse when they believe a developer has added unauthorized charges to the purchase price. It underscores the importance of closely reviewing the wording of the APS when disputes arise.

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Closing costs or cash grab? Ontario buyers push back against developer appeared first on REM.

QUICK HITS

• A buyer agreed to purchase a marina property but refused to close when a condominium neighbour registered a notice claiming parking rights, creating a title defect. 
• The Ontario Superior Court found the seller was not responsible for the issue, as the buyer’s own actions escalated the dispute, and the seller had properly invoked an annulment clause allowing termination.
• As a result, the buyer’s lawsuit for specific performance failed, and the court awarded only the return of the buyer’s deposit.

An agreement of purchase and sale (APS) for a real estate transaction may contain a term allowing a buyer to demand that a seller take steps to resolve defects or encumbrances affecting the property prior to closing, failing which the buyer can terminate the deal. 

A key factor is whether or not the seller knew about the defect at issue at the time that the APS was entered into, as demonstrated by the Ontario Superior Court of Justice in Brighton Breeze Ltd. v. Noel Property Management Ltd., 2025.

In March 2021, the plaintiff agreed to purchase a waterfront property in Brighton, Ont., from the defendant for $950,000, with a deposit of $100,000. The closing date was eventually scheduled for Feb. 28, 2022.

Due diligence period and annulment clause

The APS provided the plaintiff with 120 days to conduct due diligence about all aspects of the property. The APS contained an “annulment clause”, which provided the plaintiff with the right to make valid objections to title and the option to terminate the transaction and recover the deposit if the seller was unwilling to remove, remedy or satisfy such objections.

The property was part of a marina owned by the seller that provided seasonal dock slip rentals. One of the property’s neighbours was a condominium corporation with unit owners who had docks on the waterfront of the property that were installed under informal verbal agreements with the seller. There was also a restaurant adjacent to the property that was granted the use of a portion of the two customer docks.

Plaintiff’s development intentions and financing requirements

The plaintiff buyer intended to develop a townhouse project on the property with adjoining dock slips for the owners.

In order to qualify for mortgage financing, the plaintiff had to be able to demonstrate that no docks and parking spots were assigned to others who could claim ownership of them. The plaintiff asked the seller for permission to contact the neighbours with boat slips on the property for more information.

The seller offered to cooperate but advised that there were verbal agreements that had been granted to some homeowners and the restaurant concerning docks and parking on the property. The seller proposed sending a letter to the property’s neighbours outlining the plaintiff’s intentions for the property.

Eventually, relations deteriorated between the plaintiff and seller due to the parking and dock issues, and even though the transaction had not been completed, the plaintiff wrote to the condominium neighbour and demanded that its unit owners and visitors cease trespassing on the property.

Registration of notice and escalation of dispute

As a result, the condominium registered a notice on title to the property under section 71 of the Land Titles Act, claiming an unregistered interest in the property, and commenced an application against the plaintiff and the seller.

On the closing date of the transaction, the seller tendered, but the plaintiff refused to waive its demand that the seller remove the notice from title.

In June 2022, the Superior Court of Justice heard the condominium’s application and found that it did have parking rights on the property and that the seller had the misfortune of being caught in the crossfire of the dispute between the plaintiff and the condominium.

The condominium removed the notice following the application, but by that point, the sale had fallen through since the closing date had passed.

Plaintiff’s claim for specific performance

The plaintiff pursued an action against the seller, alleging that the seller’s failure to transfer clear title to it on the date of closing amounted to a breach of the APS. The plaintiff sought specific performance requiring the seller to complete the transaction.

In response to the plaintiff’s claim, the seller denied that it rescinded the agreement and stated that it had remained ready and willing to close the transaction if the plaintiff had elected to do so. Since the plaintiff was unwilling to waive its objection to title, the seller took the position that the APS was at an end and offered to return the deposit.

The parties brought duelling motions for summary judgment.

Legal principles on title defects and seller’s obligations

The motion judge noted that there is a distinction in the applicable law between a title defect that existed, with the vendor’s knowledge, at the time that the APS was entered into, and one that is discovered thereafter. Rescission will not be readily available to a vendor who entered into an agreement recklessly and with full knowledge of their inability to remove the defect in title.

However, the law does not require a seller to engage in litigation with a third party to remove an objection to title.

In the motion judge’s view, the plaintiff’s argument was premised on the assertion that the seller was reckless in entering into the APS because it had knowledge of the underlying issues involving parking and the use of docks by the property’s neighbours that eventually gave rise to the notice registered by the condominium.

This argument was rejected. The motion judge found that it was the buyer’s antagonism towards the condominium neighbour that led to the notice being registered, not actual title issues. As of the scheduled closing date, the hearing date for the application had yet to occur, and there was nothing that the seller could do to convince the condominium to remove the notice from title. There was also no evidence that the plaintiff requested an extension to the APS before the application was heard.

Title defect versus encumbrance and seller’s rights

In the motion judge’s view, the condominium’s notice was a title defect rather than an encumbrance, as the seller could not compel or rely on any legal right to discharge it. Since it was an objection to title, the seller was allowed to rely on the annulment clause in the APS. It put the plaintiff to its election and offered, as it was contractually required to do, to return the deposit in full.

The motion judge found that the seller acted reasonably before relying on the annulment clause. At closing, the seller took all steps necessary to put the plaintiff in a position to waive its demand by tendering the closing documents, showing that it was ready and able to complete the transaction. When the closing date came and went without the plaintiff making its election, the seller rightly treated the transaction at an end.

The seller was therefore entitled to rely on the annulment clause to declare the APS null and void.

Final decision and lessons for buyers

In the result, the court found that the plaintiff failed to establish grounds for specific performance and was entitled only to its deposit, subject to any claim for costs in favour of the seller that may be awarded for the motions. The plaintiff’s claim was otherwise dismissed.

The decision shows that careful consideration should be made by a buyer as to whether to take the position that a seller is required to address any title issues that arise from claims made by third parties. The buyer could have chosen to close the purchase and deal with the neighbour’s claims thereafter, or sought an extension of the closing date. Instead, it waited until the court dealt with the neighbour’s application and sued the seller for title after the transaction had been terminated.

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Buyer’s dispute with neighbour sinks $950K waterfront deal appeared first on REM.

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Dispute over exchange of keys leads to five years of litigation appeared first on REM.

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Buyer’s corporation fails to close—but owner not personally liable, says court appeared first on REM.

QUICK HITS

• The Ontario Court of Appeal overturned a decision ruling that buyers who submitted timely requisitions to remove oil and gas leases from title had a valid basis to refuse closing. 
• The motion judge had held that only requisitions going to the “root of title” could justify backing out, but the appeal court found this was an error in law. 

In a real estate transaction, the agreement of purchase and sale will include a deadline by which a buyer may submit requisitions for issues that they want the seller to address prior to closing. Typical requisitions pertain to discharging mortgages, outstanding work orders, or other potential encumbrances on title. 

A purchaser must submit requisitions prior to the requisition date stipulated in the Agreement of Purchase and Sale (APS). Certain requisitions, however, pertain to issues so fundamental to the APS that a purchaser may submit them even after the requisition deadline.

If a seller fails to satisfy a valid requisition prior to the closing, the buyer may be in a position to refuse to complete the transaction. Traditionally, an outstanding requisition on an issue that goes to “root of title” allowed a buyer to refuse to close. The traditional “root of title” analysis is not always clearly applied.

A case study on disputed requisitions

This is illustrated by the decision of the Court of Appeal for Ontario in Van Hove v. Dryuff, which overturned a summary judgment decision.

In this matter, the plaintiff sellers entered into an APS to sell their property to the defendant buyers for $2,355,000, set to close on Sept. 2, 2022. The buyers paid a $50,000 deposit.

The buyers’ lawyer sent a requisition letter prior to the deadline for doing so, demanding that all oil and gas leases registered on title be removed. The sellers did not do so by the closing date and the buyers refused to close. The sellers ultimately sold the property to another purchaser for $1,850,000.

The sellers sued the buyers for the difference in sale price and moved for summary judgment.

Root of title vs. valid defence to close

In order to succeed on their motion, the sellers had to demonstrate that the buyers had no valid justification for failing to close on the APS. The buyers argued that they had made a valid requisition regarding the oil and gas leases. This requisition was not fulfilled, and as such, this failure was a complete defence to their refusal to close.

The motion judge disagreed.

The buyers relied on cases where an issue was raised after the requisition deadline but nevertheless went to “root of title”. In such instances, the courts have found that the issue was so significant that it resulted in a total failure of consideration and that buyers were not receiving what they had contracted for. That was not the situation at hand.

In the motion judge’s view, while some issues that go to the root of title can be raised as a valid reason for refusing to complete a transaction, even if those objections were not made prior to the requisition deadline, this did not mean that any unfulfilled requisition would justify failing to close. It would be an absurd result if any unfulfilled requisition made within the timeline could be a valid defence to a failure to close. The motion judge reasoned that “A requisition must be on an issue that goes to the root of title for it to be a valid defence against a failure to close.”

Motion judge’s decision and the appeal

Based on this approach, the buyers did not establish that the requisition regarding the gas and oil leases was a valid reason to refuse to close. Based on the record filed for the motion, there was no evidence to demonstrate that the gas well on the property, and the three expired oil and gas leases registered on title, would result in a total failure of consideration. In other words, there was no evidence that the buyers would not receive what they contracted for if the leases were not discharged.

The motion judge therefore determined that the buyers were liable to the sellers for the difference in purchase price, the carrying costs of the property until the sellers’ ultimate sale of the property, the seller’s legal costs incurred for the ultimate sale, bridge financing, and the interest on a line of credit. In total, this amounted to $542,269.76.

The Court of Appeal overturned the motion judge’s decision, providing a one-paragraph explanation for the motion judge’s error: “The purchasers submitted requisitions concerning oil and gas leases within the time frame for doing so under the agreement of purchase and sale. The motion judge erred in law in holding the requisitions were invalid because they did not go to the root of title”. For this point, the Court of Appeal referred to the decision of Chan v. Magral.

Types of title requisitions and their legal weight 

In Chan v. Magral, the court undertook a review of the four types of requisitions:

1. Title requisitions that go to root of title
2. Title requisitions that are matters of conveyance
3. Latent title requisitions
4. Title requisition simpliciter

The first type, requisitions that go to root of title, was considered by the motion judge in Van Hove. The second type, requisitions which are matters of conveyance, involved issues that are within the power of the seller to satisfy. The third type, latent title requisitions, deals with issues that could not be discovered during the requisition period. The final type, simple title requisitions, are requisitions that must be made in a timely way and cannot be submitted after the requisition deadline.

In Chan v. Magral, the failed APS did not close due to the seller’s failure to remove a mortgage, notice of interest, and four open building permits from title prior to closing. The sellers had requisitioned the removal of the open building permits past the requisition date. By the day of closing, the seller had failed to remove the permits, and the buyers refused to close. The court held that this requisition was a matter of conveyance which could be requisitioned right up until closing.  The court held that the buyers were justified in refusing to close and entitled to the return of their deposit.

Legal complexity in requisition disputes 

It is not precisely clear why the Court of Appeal disagreed with the motion judge’s decision in Van Hove v. Dryuff, given the brevity of the reasons, but one may surmise that the issue was in the motion judge’s failure to consider the analysis outlined in Chan v. Magral, and concluding simply that a requisition must be on an issue that goes to the root of title for it to be a valid defence against a failure to close.

The Court of Appeal has affirmed in other cases that some types of requisitions that do not relate to root of title per se may still provide grounds to refuse to close. In EPRF Holdings Limited v. Fergus Bloor Inc. the Court affirmed that outstanding work permits were valid grounds to refuse to close.

In Van Hove v. Dryuff, whether or not the requisition concerning the gas and oil leases was valid was left to be determined on another day. 

Written by James Cook and Isabel Yoo

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Ontario’s top court overturns decision on requisition dispute appeared first on REM.