Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

May 5th - 2006

LEGALBEAT: Keep the ring

The buyer lost his job and decided not to complete his purchase.

The buyer lost his job and decided not to complete his purchase. The buyer's agent said that he told that to the listing agent and there was a discussion that the buyer could have his deposit returned and sign a mutual release.

The listing agent denied that and insisted that he had told the buyer's agent that he would discuss the situation with the seller and advise him. The seller refused to sign the release, and claimed the $10,000 deposit. The house was put back on the market and sold for more than this buyer had agreed to pay.

The buyer sued the seller and the listing agent on the basis that they had agreed to the return of the deposit. The judge preferred the plausible evidence of the listing agent, especially since there was no documentation kept by the buyer's agent to confirm his version of the events.

Does the buyer forfeit his deposit, even though the sellers have profited from his breach of contract? The judge said that a deposit is a "security or guarantee for the completion of a contract. It is forfeitable by the payer (buyer) to the payee (seller) in the case where the purchaser repudiates the contract, unless, of course, the contract provides otherwise… The contract by implication brings about this result."

- a Toronto Small Claims Court decision

Merv's Comments
The judge could have gone further and discussed whether the forfeiture should not be permitted if it was "unconscionable" as a matter of equity. However, that was not argued by the counsel or agent for the litigants. So, caveat emptor. If you make a deposit and decide to walk, you lose your deposit. In a falling market you may also get sued for any deficiency on a resale. If you are going to give a nice engagement ring as a sign of good faith, maybe you should go through with the wedding.

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1969 OREA president Albert Fish dies Deposits can seal the deal

For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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