Eo v. Chen, 2025 ONSC 6977 and the Risk of Builder Failure
A recent Ontario Superior Court decision, Eo v. Chen, provides important guidance on assignment agreements for pre-construction properties and clarifies when an assignor’s obligations truly end.
The case is especially significant given the growing number of builder insolvencies and cancelled projects across Ontario.
The Background
The dispute arose from the assignment of a pre-construction townhouse.
- The original purchaser (the assignor) bought from the builder, Stateview Homes, in 2020.
- In January 2022, the assignor agreed to sell his interest by assignment to the plaintiffs (the assignees) for $389,010.
- The assignment used OREA Form 145, but with custom Schedule A terms negotiated by the parties.
- The builder consented to the assignment in March 2022.
- All assignment funds were paid and released to the assignor, completing the assignment transaction.
Two years later, in January 2024, the builder entered receivership and terminated the underlying Agreement of Purchase and Sale.
The assignees then demanded repayment of the entire assignment price.
The Legal Issue
The plaintiffs relied on paragraph 17 of OREA Form 145, which states that if the assignment cannot be completed due to the builder’s default, all monies paid under the assignment are to be returned.
They argued that:
- There were effectively two completion dates — one for the assignment and one for the builder’s closing.
- Because the builder defaulted before the APS closed, the assignor remained liable to return the assignment fee.
The assignor argued the opposite:
- The assignment agreement was fully completed in March 2022.
- Once completed, the contract ended.
- The subsequent collapse of the builder was arisk assumed by the assignees.
The Court’s Decision
Justice Healey dismissed the assignees’ claim and granted summary judgment in favour of the assignor.
Why the Plaintiffs Lost
1. This Contract Was Different from Prior Cases
The plaintiffs relied heavily on Ayuba v. Erhunmwun (2025) andWei v. Meng (2024), where Courts ordered assignors to return assignment fees after builder failures.
However, the Court held those cases were distinguishable.
In Eo v. Chen:
- The parties defined exactly when the assignment was complete.
- All money was released to the assignor, not held in trust.
- A key “deposit-returning” trust clause found in Ayuba and Wei was deliberately struck out.
- No further payments or obligations remained after builder consent and payment.
Once those steps occurred, the assignment agreement was at an end.
2. Paragraph 17 Did Not Survive Completion
Although paragraph 17 remained in the standard form, the court held it could not be read in isolation.
The customized Schedule A terms:
- Explicitly defined completion.
- Authorized the immediate release of funds.
- Confirmed that nothing further was required between assignor and assignee.
Reading paragraph 17 as surviving completion would contradict the rest of the agreement.
3. The Risk of Builder Failure Was Assumed
The Court acknowledged the harsh outcome for the assignees but emphasized that:
- The assignment price was paid years before any guaranteed builder closing date.
- The builder’s occupancy date was expressly tentative.
- The parties were free to allocate risk differently but did not do so.
This was a commercial risk, not a legal defect.
No Unjust Enrichment
The alternative claim for unjust enrichment also failed.
The Court confirmed:
- A valid contract is a juristic reason for retaining money.
- Where a loss flows from a negotiated bargain, courts will not rewrite the deal.
Additional Paragraphs
Here is the wording:
“The parties agree that, upon all conditions of this Agreement being met and the payment of the balance of the purchase price being concluded all monies held in trust shall be released to the Assignor and the brokerage shall be entitled to release any commissions payable to the brokerages as payment for services rendered. This clause shall constitute the Assignees full and final irrevocable direction to release the monies and no further authorization is required.”
One of the changes required by the defendant in his counteroffer was that the Assignment Agreement would have a completion date. Schedule A specifies the completion date for the Assignment Agreement, as follows:
“THE COMPLETION DATE of this Assignment shall be within ONE [1] business day following receipt of the fully executed consent to assign from the Vendor. The Assignee will pay the balance of payment for this Assignment Agreement, set out in item 6 of Schedule B, subject to any adjustments and any other provision of this Agreement to the Assignor, in the form of a Bank Draft or Certified Cheque payable to the Assignor’s solicitor in trust upon acceptance of this Assignment Agreement and receipt of consent to assign from the Vendor.
Schedule A also provides:
“In the event that the Agreement of Purchase and sale is not completed by the Vendor for any reason whatsoever, all deposit paid by the Assignee shall be returned to the Assignee and the Assignor shall not [sic] liable to the Assignee for any loss, costs, expenses or damages incurred by reason of the non-completion of the Agreement of Purchase and Sale and this Agreement.”
Considerations for Ontario Assignments
This case reinforces several critical points:
✔ Form 145 is not determinative — customized Schedule A terms can override standard clauses
✔ Completion matters — once an assignment is fully performed, obligations may end
✔ Builder risk must be addressed explicitly if assignees want protection
✔ Courts will not rescue a bad bargain simply because a project later collapses
Real Estate Agents select Completion Time
There are three choices for completion on the pulldown menu:
1) upon acceptance,
2) upon interim occupancy, and
3) upon condo registration.
Never choose #1 as a Buyer. The safe route is #3.
Result
Eo v. Chen confirms that not all assignment agreements survive builder failure. Where the parties clearly define completion and release funds, the assignment may be completed, even if the project never gets built.
For buyers, investors, and agents, this decision highlights the importance of careful drafting and understanding who bears the risk when a builder fails.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com