Suing Over Failed Real Estate Deals

Suing Over Failed Real Estate Deals


From Owen Sound to Collingwood to Port Elgin and beyond, real estate prices are rocketing. A few years ago, they were collapsing.  Volatile prices can lead to bad behaviour both ways – on the part of the buyer and of the seller. Our firm has sued for failed real estate deals representing both buyers and sellers.



In a rising market that is on fire, often the vendor has regrets and thinks he sold too low.  He looks for an out under the agreement and will look for almost anything to kill the deal.


That was the case with Alex and Kelly Lucas who bought a place in Howard Park, West Toronto.  It was a construction condo and in the four years that passed between agreement and formal closing date, Toronto prices hit the sky.  The vendors wanted out of the deal and claimed that since (pre-condo registration) the Lucas’ had “rented” the place to a friend, this violated one of the clauses of the agreement, causing the deal to be dead in the water.  The vendors sold to someone else, the kids of one of the builders.


This past month, the Court of Appeal said nuts to that and ordered the place transferred to the Lucas family. The court ruled that the loan of the place to a friend did not amount to an illegal sublease and further held that the vendors had known of this but did nothing to kill the deal for the better part of a year.


Now, in the past, courts were reluctant to order the property to be handed over, especially for generic places such as a downtown condo.  The courts would instead order compensation.  But here, in a clear message to the markets, the court held that it would not be fair to the Lucas couple to force them to prove their financial losses in an escalating market; the vendors had tied up the Lucas deposit ($75,000) for many years and they should not have to wait longer for a just solution.  The condo was ordered transferred to them and the owners’ kids were out of luck.


This case is, as they say, a very very big deal.




In a falling market, “buyer’s regret” is often the order of the day.  Purchasers want out of their deals in the worst way.  They prefer to ride out the drop or to buy another equivalent home for less money.  The vendor is no fool and knows that if she lets this agreement die, she will never get the same price with someone else.  So she holds the purchasers to the deal.


If the vendor has “clean hands” (that is, was perfectly ready to close the deal) and the purchasers walk from the deal, the homeowner should:

• Keep the deposit.  If the agent insists on keeping it, sue immediately for its payment.   The agent and purchasers will likely fold and in fact, no extended lawsuit will be necessary.  Our firm does this all the time.

• List the property for sale for a reasonable period of time.  Act responsibly when considering new offers.  No fire sales allowed, in other words, but you are allowed to carefully reduce the price over time until it sells and you don’t have to wait until the over all market recovers.

• Sue the original purchasers for the difference between what they offered for your house and what you ended up getting from the new purchasers.  Again, if the paper is fairly clear cut and if the homeowner has acted with “clean hands”, no trial may be necessary – you can ask a judge to decide the matter on a short form basis on, say, a Thursday morning.  Again, our firm has done this repeatedly over the years.

• Sue for the difference in prices and for any additional carrying costs, credit the defendant with the deposit which you scooped and go for a court judgement on the balance.

Many are under the impression that the most they can lose if they walk away from a deal is the deposit. Nothing could be further from the truth. 




The vast majority of real estate deals close on time and without a kerfuffle.  For those that don’t feel free to call or email our firm.  We would be happy to hold the other side to their commitment.