Many people will argue that there is no contract unless the deposit has been paid. So, in effect, there is a slight waiting period before we have a binding deal between the two parties. The deposit must be paid within 24 hours or we have no deal. The parties can simply walk away from the transaction. No harm, no foul.
All of that is simply untrue. It’s not correct. It’s just a figment of someone’s imagination. It’s a point of view often expressed by real estate agents, some lawyers, and others who have never, ever, ever done any legal research on this point.
The law is clear. You have a binding contract once “acceptance” has been communicated to the other side. You need either consideration (a promise for a promise will do) or a seal, and that’s it.
The deposit is just a term of the agreement. It’s not required. You don’t have to have it, and you still have a contract. It would be nice, but it’s actually unnecessary.
If you say there is a deposit and the deposit is not paid, this is a simple breach of contract and the Seller has options:
- Elect to terminate, and sue for damages, and
- Ignore the breach and proceed with the transaction.
In Pollard v. Perry, Justice Vella of the Superior Court of Ontario on 14 September 2022 awarded damages to the Seller. The Buyer Perry had not paid the deposit of $50,000.00. That didn’t end the deal. There was still a contract, Perry was in breach, and Pollard received damages.
Brian Madigan LL.B., Broker
Thanks for this, Brian. If the Seller chooses option 1 (suing for damages), can they still sell the property to someone else BEFORE the case is heard?