Reducing the Price on a Firm Offer
Published on 29 August 2022, 07:22:56 AM
Your buyer was super enthusiastic, and made a fabulous firm offer. You’re delighted with the price you got. It sure beats waiting for those conditional offers house sellers usually receive.
Just when you thought the deal was done, the buyer announces they can’t get the mortgage they need. Do you really have to reduce the price on a firm offer?
Firm offer real estate deals are just what they sound like, an offer to purchase with no conditions to hold you back.
Yielding to a buyer is at the seller’s discretion.
What is a firm offer in real estate?
How a New Build Home Deal Went Astray
A pair of Oakville new build home buyers found that out the hard way (Rosehaven Homes v Aluko, 2022 ONSC 1227).
The schoolteacher couple contracted with a respected local developer by signing a firm offer for a new build home in April 2017. Aside from some terms, the “take it or leave it” contract, signed in the seller’s sales office, was non-negotiable. It called for the buyers to pay just over $1.5 million by November 2017.
The buyers were pre-approved for up to $1.2 million. When they couldn’t finance the balance, the developer sold the home for $1.06 million, and sued for its losses ($429,043.64, including 12% prejudgment interest).
Qualifying for private mortgages.
Who’s At Fault in a New Build Home Dispute
The buyers protested. The seller was an experienced home builder, hadn’t confirmed they could afford the home, and hadn’t suggested independent legal advice. Their last-ditch request for a vendor take back mortgage was rejected by the seller.
The court weighed in. The sales contract didn’t include any representations or warranties beyond its unconditional terms, and the seller emailed the buyers in advance that only “firm deals” were being accepted.
As for the vendor take back mortgage, the court pointed to an earlier appeal court decision (Azzarello v Shawqi, 2019 ONCA 820) that sellers “don’t have to accept a lower purchase amount on closing and become the buyers’ financier”.
How to buy a new build house.
Seller’s Duties in Firm Offer Real Estate Deals
What does this mean for you?
- Sellers don’t have a duty of care to buyers. What is in a firm offer, legally binding sales contract stands.
- You can sue for the difference between a buyer’s offer and the ultimate sales price you get.
- You must show you took steps to mitigate your losses, such as relisting, rejecting low-ball offers, or renting your home until it sells.
- Courts may reimburse you for expenses like moving or storage, re-staging your home, or carrying a mortgage until the home is resold.
- Good faith deposits could be forfeited to compensate for your losses. The courts will decide, based on previous legal cases.
- In other words, you’re on firm legal ground to insist on the terms and conditions in the agreement of purchase and sale — unless you breach the contract yourself.
Can a buyer back out of a purchase agreement in Ontario?
Why You Need a Real Estate Lawyer
Bring firm offer real estate agreements to Axess Law to review. Our experienced legal team reads the fine print in your draft or signed agreement of purchase and sale. We tell you if terms and conditions in a legally binding contract are problematic, and negotiate with a buyer’s or seller’s lawyer to amend the agreement to protect your financial interests.
Making an amendment to the agreement of purchase and sale.
Finding mortgage financing can take time. If your buyer is almost there, but needs a few days more to get a favourable mortgage loan, Axess Law moves the closing date back. When the buyer’s lender is ready, we liase with your bank, credit union, trust company, or private lender to discharge your own mortgages and make the sale complete.
Calculate your CMHC debt service ratio.
Transferring title to your property to a new buyer should be straightforward. Axess Law searches your title to find financial encumbrances like construction liens or legal claims that can delay your real estate transaction. We tell you if we find anything of concern, and work with you to register the new owner on title.
Do I need a lawyer to discharge a mortgage in Ontario?
Convenient Remote Real Estate Lawyers
Conduct real estate transactions from the comfort of your home or office, with a virtual real estate lawyer. Axess Law can review firm offer real estate agreements, and witness your signature by remote video conference call. All you need is a home computer, laptop, tablet, or any compatible mobile device. Our secure, confidential video conferencing software is private and easy to use. Closing a real estate sale couldn’t be more convenient than this.
How to use a virtual real estate lawyer.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
What a real estate lawyer does.
Easy Phone or Online Appointment Bookings
No more waiting on the line for a live operator to assist you. Axess Law’s easy online booking form lets you make instant appointments any time it’s convenient. Select from day or evening appointments, 7 days a week. When you have questions about what to bring to your appointment, call our toll free 1-877-402-4277 lawyer line (647-479-0118 in Greater Toronto Area). We arrange appointment times that fit your schedule. Or drop by any Axess Law office to find the right times for you.
Axess Law has onsite parking, and easy transit access.
