Ali v. Patel, 2024 ONSC
Overview
This case involved a failed residential real estate transaction and a dispute over a $50,000 deposit. The purchasers made an offer to buy the vendors’ property but backed out before completing the deal. The vendors re-sold the home one week later for $25,000 less and sought to recover the lost value and deposit through the courts.
The central question: Was there a binding agreement of purchase and sale, or did the vendors’ actions amount to a counteroffer that the purchasers never accepted?
Facts
- June 5, 2023: The purchasers submitted an unconditional offer to purchase the vendors’ property. The offer was irrevocable until June 6 and included Schedule A.
- June 6, 2023 (evening): The vendors signed the offer but added “Schedule B” as an additional document, marking it on the first page and sending it to the purchasers’ agent.
- The vendors’ agent initially forgot to attach Schedule B, but re-sent the email minutes later, saying: “Sorry. Use this.”
- The vendors also requested that the purchasers initial the first page (to acknowledge Schedule B) and sign Schedule B itself.
- The purchasers did not sign or initial the revised version.
- June 7, 2023: The purchasers advised that they would not proceed “for unforeseen family reasons” and sent a Mutual Release, which the vendors did not sign.
- The vendors later re-listed and sold the property for $25,000 less.
Legal Issue
Was the vendors’ act of adding Schedule B a counteroffer that required the purchasers’ acceptance — or was it simply a formality that did not affect the binding nature of the agreement?
Court’s Analysis
Justice Antoniani noted that the MLS listing itself required all offers to include Schedule B. This demonstrated that the vendors regarded it as an essential term of any contract.
Although Schedule B dealt mainly with procedural matters, such as banking days, deposits, and key delivery, the Court found that the vendors treated it as necessary for a concluded agreement.
Adding Schedule B after receiving the purchasers’ offer, and asking for initials and signatures, amounted to a counteroffer, not an acceptance.
The court emphasized the following principles:
- A counteroffer is not an acceptance. (Tang v. Rong, 2021 ONSC 8058)
- A valid contract requires a meeting of the minds (Luo v. Chen, 2019 ONSC 680).
- Even a “standard” clause or schedule becomes essential if a party insists upon it.
Because the purchasers never accepted or signed the version containing Schedule B, no meeting of the minds occurred and no binding agreement was formed.
Decision
- The vendors’ signed version with Schedule B constituted a counteroffer.
- The purchasers never accepted the counteroffer.
- No binding agreement of purchase and sale existed.
- The vendors were not entitled to the $50,000 deposit.
- Summary judgment was granted in favour of the purchasers.
Important Considerations for Real Estate Agents
In Ontario real estate transactions:
- Adding any new term or document — even a “standard” Schedule — can turn an apparent acceptance into a counteroffer.
- A deal is not binding until all parties have signed all required schedules and documents.
- Real estate agents must ensure that all attachments are included and acknowledged by both sides before declaring a deal “accepted.”
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com