Real Estate Litigation: Failure to Give Extension of Closing Date is not Bad Faith

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Certificate of Pending Litigation, Civil Litigation, Commercial and Contract Litigation, Contract Disputes, Contract Termination, Real Estate | Developers, Real Estate Agent and Broker, Real Estate Litigation, Specific Performance, Summary Judgment0 Comments

The recent summary judgment motion decision in Time Development Group Inc. v. Bitton, 2018 ONSC 4384, involves a situation that arises quite often in failed closings of real estate transactions.  One of the main causes for an aborted real estate transaction is the failure of the purchaser to obtain the required financing to close on the transaction, possibly influenced by the Ontario Fair Housing Plan and the new mortgage lending rules. In this case,  the plaintiff entered into an agreement to purchase three adjoining properties for a residential home redevelopment project.  There were a series of amendments to the agreement with the terms as follows: (a) purchase price of $10.55 million; (b) deposit of $500,000; (c) two vendor take back mortgages; and (d) closing date of July 31, 2017.  The plaintiff had secured a commitment letter to finance the transaction, however, six days before the closing date, the plaintiff was dismayed to find out that their financing had been withdrawn because the market conditions had changed.  … Read More

Bhasin v. Hrynew and the Duty of Good Faith in Real Estate Agreements of Purchase and Sale

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Certificate of Pending Litigation, Commercial, Real Estate | Developers, Real Estate Agent and Broker, Real Estate Litigation0 Comments

The Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71,  recognized the duty of good faith in contract and the obligations of the parties to act honestly in the performance of their contractual obligations.  The duty of good faith applies to any contract, including real estate contracts such as Buyer Representation Agreements, Listing Agreements and Agreements of Purchase and Sale. As discussed in a previous blog post, Agreements of Purchase and Sale generally include a “time is of the essence” clause which means that time limits will be strictly enforced by the courts.  Problems often arise when vendors refuse to agree to seemingly minor indulgences requested by purchasers such as an extension of the closing date or an extension of the deadline to provide the deposit. Two recent decisions in the Ontario Superior Court of Justice have addressed the duty of good faith, as expressed in Bhasin v. Hrynew, in the performance of Agreements of Purchase and Sale.  Unfortunately for purchasers, it appears that … Read More