Seller Defaults on Closing Time

Seller Defaults on Closing Time; Buyer Deposit Returned

While this situation may seem obvious, the matter went to the Ontario Court of Appeal for final determination.

This wasn’t a straightforward Agreement of Purchase and Sale. It was the sale under Power of Sale by the third mortgagee. In order to preserve his right to continue to occupy the premises, the tenant bought out the third mortgage. Then, the Power of Sale proceedings were continued. This naturally meant that in a sale to a subsequent purchaser, the first and second mortgages would have to be paid off. That adds a complication to the sale.

The matter was decided by the Ontario Court of Appeal in Kennelly v. Hashemi, on 18 June 2018.

The Facts

Hassan Hashemi sold the property to Christopher Kennelly and Jupiter Equities, LLC on 26 January 2017.

The closing date was 14 February 2017.

The “seller” had the option to delay the closing up to two weeks.

The seller extended the closing date to 23 February 2017 and then the parties agreed that the closing time would be 2:30 p.m. on 24 February 2017.

The Decision

This is the conclusion of the Court:

“The Seller did not attempt to further extend the closing date before the Closing Time. The Agreement provides that time is of the essence and it is clear that the Seller was not ready, willing, and able to close at the Closing Time.”

“The appellant was not entitled to unilaterally extend the closing date under the Agreement after he failed to complete the transaction at the Closing Time.”

The Buyer was awarded his deposit and $10,000.00 for costs, plus disbursements and HST.

Seller’s Argument

The Seller argued that he could have extended the closing date to 28 February 2017; that was his right under the provisions of the agreement.

While that may have been so, he simply didn’t, so it doesn’t really matter what he might have done.


The specific wording of the extension provisions might have made a difference in this case. Naturally, if the Seller was to have the right to extend, it should have stated “on one or more occasions”, and now following the decision in this particular case it might also say, “after a specified but unsuccessful closing time”.

Brian Madigan LL.B., Broker

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