GETTING OUT OF A REAL ESTATE DEAL
The decision to purchase or sell a home is not one that should be taken lightly. An Agreement of Purchase and Sale, the standard agreement entered into during a real estate transaction, is a legal and binding contract. Its terms can be subject to conditions that need to be met in order for the transaction to close, but it should not be interpreted as something that one can just “get out of” if they change their minds.
While the terms of particular contracts may provide for a “cooling off” period specifically designed to allow potential purchasers time to reconsider, these are not standard clauses and it should not be assumed that they are present in your contract without negotiation. The purchase of a condo from a registered condominium corporation, for example, is subject to a ten-day rescission period per section 73 of the Condominium Act. There is no similar legislation for freehold residential homes, however. Usually, the signing of an Agreement of Purchase and Sale and the payment (or acceptance) of a deposit is considered to be a binding indication of the intention to purchase or sell a home. Simply changing one’s mind does not give an individual the right or ability to walk away from the deal.
If a purchaser leaves a seller hanging by walking away from a deal simply because the purchaser no longer wants the property, there can be serious consequences. At the very least, the purchaser will lose any deposit they placed on the property. More seriously, the purchaser can be sued by the seller for any loss that occurs as a result of having to re-list and re-sell the property. A purchaser who loses out on the property they wanted to buy because the seller changed their minds can have similar rights—at the very least, a return of their deposit, and if the property was unique and had features important to the buyers that couldn’t be easily found in a different property, they could even have the right to sue in court for the loss of that property.
There are instances where one party can refuse to close a transaction because of a fundamental breach of the contract by the other party; but these situations can be extremely difficult to identify and often these situations still end up in court with both parties seeking a definition of what a fundamental breach really is and whether one occurred in that instance. You should never rely on a fundamental breach occurring in order to get you out of a real estate deal that you are not sure about. It’s better to wait and not enter into a deal at all if you are not sure that you really want to buy (or sell) the property in question.
The most important thing to keep in mind when entering into a real estate transaction is that it is not like purchasing goods from a store; backing out of a firm real estate deal can have serious and often expensive consequences for both the buyer and seller.
Feel free to contact us at any point for assistance or advice pertaining to Real Estate Law. We may be reached at 705-435-4339 / 1-877-85LEGAL (1-877-855-3425) or contact us via email.