Can You Cancel a Real Estate Deal Due to COVID-19?
Published on 29 August 2022, 07:22:56 AM
Just as you were buying a new home, your job was paused, leaving you stressing about how to cancel a real estate deal. We don’t blame you. COVID-19 has taken you by surprise (us too!). You’ve heard about force majeure. Would that allow you to cancel a real estate deal?
The Short Answer Is…
It depends. Force majeure is an unforeseeable circumstance. Typically, it’s an “act of God” beyond your control. It can apply in commercial real estate contracts, but using it to cancel a real estate deal in Ontario? Forget it. You made a contract to buy a home, and that’s a legal obligation. COVID-19 on its own isn’t an escape clause for cancelling a real estate deal in Ontario.
Closing On Time During COVID-19
Even a force majeure clause just suspends your real estate contract temporarily. For example, a flash flood might delay, but not prevent, final signing. The courts have ruled changing your mind about a firm offer could make you liable for the difference between your offer and what the next buyer pays the seller.
Get a buyer’s right to cancel clause.
Now you ask, how can I get out of a real estate deal? If your worry is how can I cancel a property sale agreement, the answer is you can’t, unless the seller agrees to a mutual release. What happens if you back out of a real estate deal is this: you are still legally bound by the terms and conditions in the agreement of purchase and sale, and may have to go through with it.
Can you walk away from a real estate deal because of a pandemic? Maybe. Here are some other ways to make your case if a mutual release is off the table.
Protecting Yourself If You Plan to Buy or Sell
You may be just at the “pondering” stage. Ask your realtor to include a COVID-19 clause in the agreement of purchase and sale. If properly drafted, it could just protect your interests for now, and maybe even allow you to cancel a real estate deal altogether.
You can change realtors. Here’s how.
If You Are Quarantined or Ill
Being quarantined or in hospital wasn’t in your plans. Now what? Have your real estate agent amend the agreement of purchase and sale. Provided all parties agree, you could buy time to recover. Instead of cancelling a real estate date in Ontario, amendments to a real estate transaction signal to your bank, mortgage lender, and seller you plan to close the deal. Failure to perform is a risk to your credit rating. The last thing you want is a credit reporting bureau like Equifax labelling you a credit risk.
Fix the offer to purchase after you sign.
When Government Services Are Closed
Perhaps the land registry is closed. That doesn’t cancel a real estate deal. Title insurance policies can include gap insurance for emergencies. Both buyer and lender are covered against any losses while title registration is in limbo. Your mortgage lender or Axess Law’s real estate lawyers can answer any questions about your property title.
Why title insurance is a must have.
No Real Estate Lawyer
When your lawyer or notary public is unavailable for an online closing or at-home signing because of COVID-19, Axess Law’s secure, virtual signing appointment makes it possible for you to sign from anywhere. All you need is Internet, a webcam, and email. Our virtual real estate lawyers are available 7 days a week, for day or evening appointments. Confirm your appointment with Axess Law by calling 647-479-0118, toll free to 1-877-522-9377, or use our online booking form.
Find a virtual real estate lawyer in Ontario.
How Our Virtual Lawyer Service Works
You book an appointment. Your virtual real estate lawyer sends you an email with a link to a remote closing video signing. You scan and email your documents. On appointment day:
- Click on the link to enter the video conference.
- The remote lawyer verifies your photo ID.
- Your virtual lawyer reviews closing documents with you.
- You sign using video conferencing technology, or you can drop by any Axess Law office to sign in person.
- Final documents are emailed for you to print and keep.
Use virtual notarization in Ontario when you’re home bound.
You’re the Legal Owner of a New Home!
Good luck in the post-coronavirus days ahead. Home ownership is a lifelong investment. You won’t regret not having to cancel your real estate deal. Think of it as a way of keeping you and your family safe and financially secure, during COVID-19 and after.
Access lawyers in Greater Toronto Area or Ottawa at any of our locations, or use our virtual real estate lawyers throughout Ontario.
