It’s been a hectic beginning of the year for the Toronto Real Estate market, with low inventory of homes available and high demands for home ownership. Lots of buyers for each property that comes on the market have resulted in multiple offers in every sector of the market and at every price point. Employing a professional to represent you in purchasing a home is extremely important
I have heard of home buyers offering on properties on offer night, winning the bidding war against many other buyers and getting cold feet the following day, simply not delivering the deposit to the listing brokerage. Many buyers and some less experienced Realtors believe that “no deposit means no deal” which couldn’t be further from the truth.
There are many consequences for signing an agreement of purchase and sale under seal, having it accepted by the seller and failing to deliver the deposit. FIRST OF ALL, the law is clear that an agreement of purchase and sale is binding even without the deposit being paid. The seller is entitled to the deposit. The consideration of a real estate transaction is the promise to transfer title of land for the buyer’s promise to pay the agreed upon price. Not only the deposit has to be delivered to the seller, it has to be done within the time limits stated in the agreement. Clause number 20 in the APS states “TIME LIMITS: time shall in all respects be of essence”. Failure to deliver a deposit on time is a fundamental breach of an agreement of purchase and sale.
Further, failing to pay a deposit on an Agreement of Purchase and Sale puts the buyer in a situation that can be defined as an “ ANITICIPATORY BREACH” of the contract. This situation lawfully gives the sellers certain rights. The seller may choose to proceed with the rescission of the contract, or he may proceed with the pursuit of damages. The seller may decide to sell the property to another buyer and still be entitled to the first buyer’s deposit money plus damages incurred even in the case of re-selling at a higher price than the initial buyer had agreed to purchase for according to the initial Agreement of Purchase and Sale.
Not delivering the deposit after you have an accepted Agreement of Purchase and Sale may have devastating consequences for an uninformed home buyer. If you are in the process of purchasing a home, make sure you understand what you are signing, work with an experienced professional and always read the small print.
If you have any questions give me a call!
Happy house hunting!!