Can’t Get Financing On Time? You May Lose Your Deposit – Toronto Real Estate Lawyers

Gilbertson Davis LLPCautions, Certificate of Pending Litigation, Civil Liability, Civil Litigation, Real Estate Agent and Broker, Real Estate Litigation0 Comments

In the recent decision of the Ontario Court of Appeal (“ONCA”), Nguyen v. Zaza, 2023 ONCA 34, the ONCA dismissed the appellant’s appeal from a decision of a judge of the Ontario Superior Court of Justice to grant the respondent’s summary judgment motion and order forfeiture of the appellant’s deposit of $50,000 to the respondent (among other relief).

The appellant was the purchaser and the respondent was the seller of the subject property.

The agreement of purchase and sale at the center of the dispute between the parties specifically indicated that time was of the essence.

Originally, the agreement was conditional on the appellant arranging financing and a satisfactory home inspection, but the appellant waived those conditions prior to closing.

The motion judge found that on the closing date the respondent was ready, willing, and able, to close whereas the appellant did not tender the purchase price required from her for closing.

The ONCA opined that a seller is entitled to refuse an extension of time to close where a buyer does not have sufficient financing to close. Further, the ONCA upheld the motion judge’s conclusion that a deposit is intended as security for the purchaser’s performance, and absent a specific term in the agreement of purchase and sale regarding the disposition of the deposit, the deposit is forfeited to the seller if the purchaser fails to close.

The appellant made other arguments alleging that the motion judge’s reasons for decision were insufficient and alleging that the seller was not entitled to require her to complete the agreement of purchase and sale on the closing date because title to the subject property was in the name of someone else (the seller’s father) at the time the agreement of purchase and sale was signed. These arguments were also rejected by the ONCA.

The appellant was ordered to pay the respondents’ costs of appeal.

This case should be a caution to prospective purchasers of real property to ensure that they have the requisite financing in place on the date of closing of the transaction. The seller may not agree to provide an extension, and failure by a purchaser to provide payment of the purchase price on time may result in a lawsuit against them for forfeiture of the deposit, among other relief.

At Gilbertson Davis LLP, our lawyers and arbitrators can assist you, your business, company, partnership or corporation in your dispute, whether you require a lawyer to represent you or an arbitrator to offer his/her services in an arbitration. Gilbertson Davis LLP lawyers have experience in proceedings involving Real Estate Litigation, Contract Litigation, Commercial LitigationCivil LitigationBusiness TortsBusiness  LitigationArbitration and Mediation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Our mission is to provide creative, sensible, cost-effective, long-term resolutions to clients. Please contact Gilbertson Davis LLP to schedule a consultation.

Brief informational summaries about insurance litigation, commercial litigation and family law litigation matters in the courts of Ontario and Canada are periodically published on our website. Please note that our website content is for informational purposes only, and should not be construed or relied upon to provide legal advice. If you require legal advice, please request an initial consultation with Gilbertson Davis LLP using the Request Consultation Form on this webpage or by contacting our Intake Coordinator on (416) 979-2020, ext. 223 (both subject to the Terms of Use described on our Contact page).
Comments & Opinions by Gilbertson Davis LLP lawyers and staff on its Blog, or in media interviews, appearances or publications, or in professional publications, are personal to them, and do not necessarily represent the opinions of the Firm or anyone at the Firm other than the individual expressing those comments or opinions.

About the Author

Gilbertson Davis LLP

Leave a Reply

Your email address will not be published. Required fields are marked *