Zoleta v. Singh and RE/MAX Twin City Realty 2023 ONSC 5898
The Ontario Superior Court’s decision in Zoleta v. Singh and RE/MAX Twin City Realty is a timely and instructive reminder of how firmly the law treats real estate contracts, particularly when market conditions shift dramatically.
The case arose during the sharp market correction in early 2022.
The plaintiffs, homeowners in Kitchener, had agreed to sell their property for $1,150,000 under a firm, unconditional Agreement of Purchase and Sale. Like many transactions in that period, the deal was struck at the height of a rapidly escalating market. By the time the closing date approached, however, conditions had changed significantly. An appraisal obtained by the buyer came in at approximately $790,000, more than $350,000 below the agreed purchase price.
Faced with this gap, the Buyer demanded a substantial reduction in price. The Court had little difficulty characterizing this as more than a mere request. It was, in effect, a refusal to close unless the Seller agreed to fundamentally alter the bargain. In legal terms, this amounted to anticipatory repudiation of the contract.
The Sellers did not accept that repudiation. Instead, they did what prudent parties often do in uncertain circumstances: they protected themselves. Concerned that the Buyer would not close, they relisted the property prior to the scheduled closing date, but importantly, they did so transparently and while continuing to insist that the original agreement be completed.
This raised the central issue in the case:
- does relisting a property before closing amount to a repudiation of the existing agreement?
The Court’s answer was clear: “no, not in these circumstances”. The Sellers had communicated their intentions, remained ready, willing, and able to close, and did not enter into a competing transaction before the closing date.
Their conduct, viewed objectively, did not demonstrate an intention to abandon the agreement. Rather, it reflected a reasonable, precautionary step in response to a Buyer who had already signaled difficulty in completing the deal.
Equally important was the Buyer’s own conduct. Despite knowing the property had been relisted, he continued to seek extensions and even took steps consistent with closing. It was only at the last moment, when financing had failed and negotiations broke down, that he asserted the agreement was “null and void.”
The Court found this to be too little, too late. A party who wishes to accept a repudiation must do so clearly and promptly. The Buyer instead affirmed the contract, and could not later rely on the Sellers’ conduct to escape his obligations.
The Buyer also attempted to shift blame by alleging that the relisting interfered with his ability to secure financing. The Court was not persuaded. Even if the relisting created complications, the Buyer had options. He could have objected or requested that the listing be temporarily withdrawn. He did neither. More fundamentally, the risk of financing in a firm transaction rests with the Buyer.
The claims against the brokerage, RE/MAX Twin City Realty, were dismissed outright.
Allegations of conspiracy and misconduct were unsupported by evidence. The Court reaffirmed that a Listing agent has no obligation to disclose a property’s “true value” to a Buyer, particularly where the Buyer is represented by their own agent.
In the end, the consequences for the Buyer were significant. The property was resold in a declining market for $800,000, and the Court awarded the Sellers over $345,000 in damages, along with interest. The Buyer’s deposit was forfeited, and all counterclaims were dismissed.
This decision reinforces several enduring principles of real estate law. A firm agreement is just that: firm.
Market fluctuations, even dramatic ones, do not relieve a party from their contractual obligations.
Demanding a price reduction can amount to repudiation if it signals an unwillingness to close on agreed terms.
Sellers, for their part, may take reasonable protective steps, including relisting, provided they continue to honour the existing agreement. And perhaps most importantly, timing and clarity matter: a party cannot hedge its position and later attempt to rely on a breach it did not promptly accept.
In a volatile market, this case serves as a cautionary tale. Real estate transactions are not speculative instruments to be abandoned when conditions shift. They are binding legal commitments and the Courts will enforce them accordingly.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com