When a purchaser of a real estate property fails to close and the vendor takes reasonable steps to sell the property at arm’s length, the measure of damages is usually the difference between the contract price and the resale price. However, as in Eyelet Investments, this is not always the case. A vendor of a pre-construction house has an obligation to mitigate their damages after a failed closing of the purchase agreement. If a purchaser intends to challenge the mitigation efforts and that the vendor failed to mitigate, it is the purchaser’s burden to prove the failure. Summary Judgment motion in Eyelet Investments Corp. v. Lin Zhou, 2025 ONSC 4434 In Eyelet Investments Corp. v. Lin Zhou, 2025 ONSC 4434 (CanLII), the purchaser requested supporting evidence from the vendor of their efforts to mitigate, which the vendor could not provide. At summary judgment, the motion judge found an adverse … Read More
Toronto home price correction largest since early 1990s – when the pre-construction home sale will not close
Since their peak in 2022, home prices in the GTA have declined by more than 24% coupled with the lowest volume of home sales in years. The decline has led to builders being unable to obtain project financing causing years-long construction delays, and home buyers receiving a home value appraisal before closing that leaves them with a mortgage shortfall. For purchases of pre-construction homes, home buyers and sellers are now facing a real risk that their purchase and sale of a home will not close, raising the threat of a legal dispute. Navigating a party’s potential early exit from a purchase and sale agreement of a pre-construction condo or house can be a challenging and stressful financial event. Common scenarios that lead to a party considering an early exit include: appraisal or re-appraisal of the property value delayed construction by the builder buyer shortfall in mortgage financing changes to the … Read More