Threatened Cancellation of Contract By Buyer Failing to deliver the Deposit

Question:
I am the Listing agent acting on behalf of my client who is selling his condominium. I sold the condo conditional on Status and Finance yesterday. In fact, there were 2 offers, one $10,000 higher than the other. Both had same conditions.

Today, I have received a text message that they are not going through with the deal.

My question is could the Seller be entitled to damages as the Buyers did not even try to satisfy the conditions. 

My managing broker has suggested going to taking the lower offer conditional upon a mutual release. I am hesitant to do that though. 

Answer:

No, they are stuck with the deal. There is a contract already in place.

Failing to show up with the deposit simply puts them in breach of contract.

The law here involves the obligation of “good faith contractual performance”.

That’s from the Bhasin v. Hrynew decision of the Supreme Court of Canada.

So what do the Buyers have to prove?

1) that there is something wrong with the status, or

2) they failed to get financiang.

Both of these would be untrue since hey didn’t even bother attempting to do either.

They used to be right. That was a good move until 14 November 2014 (Bhasin v Hrynew). After that, it’s very risky.

Your Sellers can:

1) accept the failure to pay the deposit as a breach of contract and sue them afterwards for their financial losses, or 

2) at a minimum, assuming you sold for more money and made a profit, sue for the amount f the deposit.

Actually, once they (Buyer and the negligent Buyer’s agent) become aware of the law by a letter from the Seller’s lawyer, they will likely close the deal.

Your Manager’s advice requires a Mutual Release. The Buyer is in breach of contract. There is no reason for a Mutual Release.

It looks like the Buyers simply got “Buyers’ remorse”.

And, by the way, they are obligated to pay commissions on this transaction.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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