Consequences of Breaching Agreement of Purchase and Sale
Published on 29 August 2022, 07:22:56 AM
Just how many real estate deals are failing in Ontario may astound you.
Balancing skepticism with your optimism could affect what happens to the deposit when buying a house. Prudent buyers and sellers who make the right moves can avoid joining the many real estate deals that are failing in Ontario distinctly in the consequences of breaching agreements.
- Buyer’s remorse.
- Seller gets a better offer.
- Mortgage financing isn’t available.
- Buyer’s bid exceeds the home’s appraised market value.
- Changing interest rates make a deal unaffordable.
- Buyer’s home doesn’t sell on time.
- Home inspection turns up problems the seller declines to repair.
Common questions to ask real estate lawyers.
When Do Real Estate Deals Fall Through?
Beyond the obvious reasons, many real estate deals are failing in Ontario because of buyer insincerity. Real estate analysts trace the latest trend to multiple bidding scenarios.
Bidding on multiple properties has become so popular, buyers (and some sellers) have lost sight of the fact the agreement of purchase and sale is a legal contract. Real estate deals that are failing in Ontario can net sellers generous court awards:
- A King City buyer who reneged on multiple deposits was found liable for the difference between his $2.45 million offer, the home’s final $1.6 million selling price, and legal costs.
- A Markham developer lost a $1 million deposit after being unable to come up with a $40 million payment for a land parcel for seniors’ housing. A verbal agreement to extend the payment was insufficient, since the APS allowed the seller to terminate at any time.
- A buyer who struck a subject-to financing clause from his offer to purchase lost over $174,000 when the seller resold the home for less.
- Both the seller and buyer were out money when a real estate deal that failed in Ontario resulted in a $75,000 deposit being forfeited, and the home selling for $200,000 less than the buyer’s revised offer.
What happens when a real estate deal falls through? Who gets the deposit.
Failed Real Estate Deals and What to Do
So what can a seller do if a buyer fails to complete a purchase? Any hesitancy posting a deposit in the first 24 hours could be a sign a buyer isn’t committed, or has simply changed their mind.
Three strategies sellers can use to avoid joining the many real estate deals failing in Ontario.
- Include a mutual consent clause in the APS. That allows your buyer to withdraw without financial or legal consequences. In hot markets, moving on to the next highest offer can be the best strategy.
- Inform the buyer’s realtor you plan to continue to market your property until the buyer lifts their subject-to conditions. With so many real estate deals failing in Ontario, having a back-up offer will lessen the financial blow if a buyer pulls out.
- Add a 48-hour escape clause to every APS you sign. If a better offer comes along, an escape clause forces the buyer to finalize their offer within 48 hours of a demand for a firm commitment. Buyers may not appreciate being asked to forego a home inspection or confirmed mortgage financing, so make it clear those are the terms and conditions before you countersign conditional offers.
Buyer delays closing and real estate law in Ontario.
Why You Need a Real Estate Lawyer
If this is your first home, rest assured Axess Law’s licensed real estate lawyers will walk you through every step of buying or selling a condo. Experienced home buyers and sellers will appreciate our quick, convenient services.
We review the offer to purchase to ensure it includes essential clauses that protect your buyers’ or sellers’ right to cancel if anything is amiss. Our experienced legal team liaises with your realtor and bank, credit union, or trust company to receive documents we need to complete your real estate transaction.
Have an existing mortgage? We discharge it, and arrange for you to sign the papers for new mortgages you make to finance a condo purchase or move on to your next home. Having problems getting mortgage financing? Axess Law negotiates with the sellers’ lawyer to amend your agreement of purchase and sale to buy more time to find your preferred financing.
We transfer title to your new condo by checking for outstanding financial or construction liens. We check your closing documents include the mandatory condo fire binder before presenting your final statement of adjustments.
Hire a real estate lawyer in Ontario.
Flat Fee Real Estate Lawyers
Close real estate deals for less with Axess Law’s flat fee real estate lawyers.
See what information your Axess Law lawyer needs to close your deal.
Get a qualified Ontario real estate lawyer for only $999.99 and up plus HST when you purchase a home, or $799.99 and up plus HST when you sell a pre-construction or resale condo. Your invoice is all-inclusive. You get low flat fees, with no surprises or hidden extras.
Try Our Convenient Virtual Real Estate Lawyers
Virtual real estate lawyer services bring all the convenience of online remote videoconferencing to your home or office. Make day or evening appointments that fit your schedule. E-sign real estate documents, or drop into any Axess Law open law office to finalize your real estate transaction.
How to close real estate deals by videoconference.
Book Meetings Online or By Phone
Call 647-479-0118 to find an Axess Law real estate lawyer near you. Toll free calls are accepted at 1-877-402-4207, or book your next appointment online. Our online booking form makes finding dates and times that work for you a breeze. Axess Law is here when you need us, with open law offices in Greater Toronto Area and Ottawa.
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