Kunnath v. Cartier, 2026 ONSC 1096
In Kunnath v. Cartier, the Ontario Superior Court of Justice delivered a clear and practical reminder of the legal consequences when a real estate purchaser cannot close due to financing failure.
The case arose from the sale of a residential property in Vaughan. The purchaser agreed to buy the property for $1.755 million, later renegotiated to $1.7 million, with no financing condition.
As the closing date approached, the purchaser advised that she was unable to complete the transaction without additional time to secure financing. An extension was requested, but no agreement was reached.
The vendor responded with a firm extension proposal containing strict, non-negotiable terms, including additional deposit and costs. When those terms were not accepted, the vendor treated the agreement as terminated and proceeded to resell the property at a lower price.
The Court found that the purchaser’s inability to secure financing constituted an anticipatory breach of the Agreement of Purchase and Sale.
The breach arose:
- not from the request for an extension itself, but
- from the clear indication that the purchaser lacked the ability to close on the agreed date.
The vendor was entitled to accept that breach, terminate the agreement, and move forward with mitigation efforts. Subsequent negotiations between the parties did not revive the contract, as no new agreement was ever reached.
The Court further confirmed that the vendor acted reasonably in reselling the property under time pressure, particularly given the need to complete their own related purchase. The resale, although at a lower price, was found to be a proper mitigation step.
On damages, the Court applied well-established principles. The vendor was awarded the difference between the original purchase price (as amended) and the resale price, along with additional costs including bridge financing, legal fees, and carrying costs. Total damages were assessed at $78,906.49.
The purchaser’s $70,000 deposit was forfeited and applied toward those damages, leaving a balance of $8,906.49 payable to the vendor.
This decision reinforces several key principles in Ontario real estate law. A purchaser who cannot close due to financing issues is at serious risk of being found in breach, particularly where no financing condition exists. Vendors, in turn, are entitled to act decisively once repudiation is clear and are not required to wait indefinitely while a purchaser attempts to salvage financing.
For real estate professionals and consumers, the message is straightforward: certainty of financing is critical. Without it, the legal and financial consequences can be significant.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com