
Fergus Bloor (the Buyer) submitted a deposit in the amount of $350,000.00 on a $7 million purchase. That amounted to 5% of the purchase price.
Cushman & Wakefield ULC, (“Cushman”) is the registered real estate brokerage that represented Fergus with respect to the Agreement of Purchase and Sale of the Property. It held the deposit in its trust account for the parties.
In this Action, the Buyer claims the return of the $350,000 deposit, and a dismissal of the Action against it.
The Seller, EPRF also claims it is entitled to retain the deposit funds and in addition $100,000 in punitive damages.
The Motions Court Judge stated:
“[16] Jurisprudence has established that if a transaction does not close because of a default by the purchaser, the vendor is entitled to forfeiture of the deposit. It has been held that the use of the word “deposit” in a contract for the purchase of real estate implies that the payment is intended for forfeiture upon the purchaser’s breach.
[17] The deposit was not disproportionate to the purchase price.”The Judge concluded that the “Buyer had the right to terminate the agreement …. And has the right to a return of the deposit and the Defendant Cushman is ordered to pay the amount of the deposit with interest accrued to …… the Buyer.”
This matter was appealed and the Ontario Court of Appeal agreed with the Motions Court Judge that the Buyer had the right to terminate the Agreement and was entitled to the return of the deposit.
Brian Madigan LL.B., Broker