I’m sick, yet again. This time it’s a stomach bug that I got from my 3-year-old daughter, but what parent can possibly go a full weekend without hugs and kisses from their little one?
I hate being sick, not because of the actual sickness, but because of that cloudy, hazy, “dumb” feeling in the mind. That, and everybody saying, “You should go home and get some rest!”
There is no rest for the wicked.
Our Toronto real estate market rarely provides for days off.
In any event, this is none of your concern except to say that I’m going to provide the case from the Ontario Court of Appeal, then go eat more soup. More goddam soup. What’s with being sick and eating soup? Who made this determination six-thousand years ago that, “All ye who shiver must drink from the cup of Campbell’s….”
Thanks to blog reader “Derek” for bringing this court case to our attention.
COURT OF APPEAL FOR ONTARIO
BETWEEN
Richard Kim Perkins and Sylvia Perkins
and
Shahla Sheikhtavi and Karim Samadi and Homelife Victory Team Realty Inc.
OVERVIEW
This is an appeal of a motion granting summary judgment and awarding damages resulting from the failure to close the purchase of a home.
The appellant, Shahla Sheikhtavi, claims the agreement of purchase and sale was frustrated. In the alternative, she claims there was an implied condition in her offer that the agreement was conditional on her selling her own home and obtaining mortgage financing. Lastly, she claims that the motion judge rejected uncontested evidence.
BACKGROUND FACTS
The respondents listed their home for sale in March 2017. The appellant made an offer to purchase the home on April 3, 2017. There were thirteen offers to purchase the home. The appellant’s offer was the second highest.
The appellant’s offer was accepted by the vendor.
The terms of the offer included a purchase price of $1,871,000 and a deposit of $80,000 to be held in trust by the realtor until the closing scheduled to take place on July 10, 2017. The offer was unconditional.
After the unconditional offer was accepted but before closing, the government of Ontario made a policy announcement. The evidence of two real estate agents, who swore affidavits at the request of the appellant, was that within days of this announcement, real estate prices in the area dropped 20 to 30 per cent.
On the day of closing, the appellant advised that she could not close, as she had been unable to sell her own home and could not obtain sufficient mortgage financing.
As a result of the failure to close, the respondent put the property back on the market and it sold for $1,251,888. This was $619,112 less than the appellant had agreed to pay.
The respondent commenced legal proceedings against the appellant seeking:
a) $619,112, being the difference between the amount the appellant had offered and the amount the property later sold for; and
b) carrying costs of the property between July 10, 2017 and the sale of the property.
The appellant opposed the motion for summary judgment claiming that the government announcement frustrated the agreement. She also brought her own motion seeking return of the deposit.
–
THE DECISION OF THE MOTION JUDGE
The motion judge held that,
I am not convinced that the doctrine of frustration applies in these circumstances.
Though I can agree that there was a “supervening event”, that is the announcement of the policy by the provincial government at the time, I do not find that this event was “a radical change in obligation” to force the defendant “to do something radically different from what the parties agreed.”
…
Any term to relieve the defendant from her obligation concerning financing could have been resolved by including a term concerning financing.
….
[T]he defendant knowingly did not include a term for financing. The reason for not including such term is clear from the evidence on this motion: the defendant wanted to have her offer to purchase accepted by the plaintiffs. She anticipated that an offer to purchase with the price she offered with no conditions would more likely to be accepted.
…
The defendant got what she wanted, the property at the price she was offering to purchase. She did so knowing that she took a risk; that she may not be able to obtain financing by not being able to sell her existing home. This was a risk knowingly taken by the defendant.
He therefore ordered the appellant to pay $619,112 and carrying costs in the amount of $4,621.05.
–
ANALYSIS AND CONCLUSION
We find no error in the motion judge’s disposition of the motions.
Though there was a supervening event (the announcement of a new government policy), the supervening event did not constitute frustration of the agreement, as the announcement was not such that “performance of the contract becomes a ‘thing radically different from that which was undertaken by the contract’”: Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 53.
Frustration applies to contracts including real estate transactions, when a supervening event alters the nature of the appellant’s obligation to contract with the respondent to such an extent that to compel performance despite the new and changed circumstances would be to order the appellant to do something radically different from what the parties agree to under their contract: Naylor, at para. 55.
A contract is not frustrated if the supervening event was contemplated by the parties at the time of contracting and was provided for or deliberately chosen not to be provided for in the contract: Capital Quality Homes Ltd. v. Colwyn Construction Ltd. (1975), 9 O.R. (2d) 617 (C.A.), at p. 626.
A party claiming that a contract has been frustrated has the onus of proving the constituent elements necessary to establish frustration: Bang v. Sebastian, 2018 ONSC 6226, at para. 30; Gerstel v. Kelman, 2015 ONSC 978, 40 B.L.R. (5th) 314.
In this case, the appellant deliberately chose not to include a condition that she had to be able to sell her home and obtain mortgage financing before closing as a term of her offer to purchase.
She would reasonably have known there was a risk her home would not sell at the price she sought but made an unconditional offer to purchase the respondents’ home because she wanted her offer to be accepted (although she was not the highest bidder).
The appellant was specifically told by her real estate agent that unless she put in an unconditional offer, her offer would not be accepted.
It was reasonable for the motion judge to conclude that the test for frustration was not met, as the policy announcement relied on by the appellant did not “force her to do something radically different from what the parties agreed.” The appellant’s contract was not frustrated; it was breached by the appellant.
Secondly, the agreement contains a clause that the written agreement is the entire agreement between the parties. We see no error in the motion judge’s conclusion that this precluded any implied condition or term as asserted by the appellant.
Lastly, the motion judge did not reject uncontested evidence. He accepted that there was an unforeseen event. While his reasons do not specifically mention the 20 to 30 per cent decrease in home prices cited by the real estate agents who filed affidavits in support of the appellant’s position, he accepted that there was a supervening event but found it was not a “radical change” such that the appellant should be relieved of her obligations under the contract. There was no rejection of uncontested evidence.
For these reasons, the appeal is dismissed. Partial indemnity costs to the respondents in the amount of $15,019.62 as per the Bill of Costs submitted.
Alright, some brief thoughts before my chicken-noodle…
I remember back in May of 2017 when my phone started to ring.
Every other day, a member of the media, both print and television, would call to ask me something along the lines of, “Do you have a client who purchased a house in the last couple of months, and now is unable to close on that purchase because they haven’t sold their home?”
To be honest, I did not have such a client. But more on this in a moment.
I would consistently tell these folks, “No, I don’t. And I don’t think this ‘problem’ is nearly as prevalent as the media is making it out to be…”
But the conversation would end there.
I couldn’t help but feel, at the time, like the media was creating news because they were searching so hard for a particular story. I understand that it’s a sexy story. If it bleeds, it leads. But I had interns from Toronto morning shows calling me to ask if I had clients “spurned by the market” that would tell their story on live television!
We do know that there were folks who bought in early 2017 and that were then unable to close on those purchases.
Only through this court case posted above are we now not only able to grasp the gravity of the situation, but also see just how dire the consequences were.
Let’s be frank: few people can afford to pay $619,112 without either selling their home and moving out to rent, declaring personal bankruptcy, or some form of both.
This case is absolutely crippling.
I never experienced something like this in 2017, perhaps out of luck, or perhaps because the most pronounced drops in value were outside the central core where I do very little work. But I will say that in 2019, I had this situation twice.
When meeting with buyers who were looking to buy before selling, I used to say, “I’ve never had a person ‘stuck’ before in the fifteen years I’ve been selling real estate.” All of that changed this year.
In the first case, I sold a house to buyers who owned a downtown Toronto condo, and had about 50 days to close. Not in my wildest dreams did I think that a downtown condo, 2-bed, 2-bath, 900 square feet, upgraded, staged, marketed, and well-presented, wouldn’t sell in five or six weeks.
Maybe it was priced too high. Maybe we overestimated the demand in this area. But condos have been selling like hot-cakes in here ever since! Did we just get a raw deal?
In the second case, I sold a house to buyers who owned a luxury condo in the midtown area, and this time we had over two months to sell the condo, but there were just no takers. To make matters worse, during our two-month listing period, a completely inferior unit, which faced the goddam graveyard, was sold.
In both cases, I can state firmly and with no second thoughts that in my professional opinion, there was no reason why these two units didn’t sell during our listing period. I’ve sold hundreds of listings before, and I’ve had complete dog-crap sell with ease. I still don’t know why these places took so long to move.
In both cases, we asked for extensions on the closing of the properties purchased, and both were granted in exchange for carrying costs.
No seller wants to play hardball and say, “You’re in breach of contract, now let’s go to court.”
In the first case, the seller of that house had bought another house, so they were just another domino in the line. They had to agree to our request for an extension, or they would risk being in breach on their own purchase.
But if there’s a seller out there who doesn’t “need” to close, and who wants to accept the breach of contract and start litigation, they’re completely within their right.
This case above is fascinating, from the “frustration” argument, to the buyer’s request for their deposit back, down to the ultimate ruling that a drop in market value did not relieve the buyer of her obligation to abide by the contract.
I’ll let y’all discuss and try to provide my thoughts on Friday.
Appraiser
at 8:45 am
I do not anticipate a further appeal of this case by the appellant.
The defense (frustration of the contract) was novel at best.
Full judgement, plus carrying costs, plus partial indemnity of $15K.
Game. Set. Match.
As rare and as titillating as theses cases are, it is a stark reminder of one’s legal obligations, after signatures have been affixed to a contract.
Max
at 1:49 pm
I once had a rookie agent tell me to put in an offer with no conditions, that he can still help me get out of it if I don’t hand in the deposit cheque. That the seller won’t sue. I think he was either very confident in his hunch or a complete idiot. Turned out to be the latter.
Appraiser
at 9:17 am
Canada’s population increases by record amount. https://www150.statcan.gc.ca/n1/daily-quotidien/190930/dq190930a-eng.htm?HPA=1
“In 2018/2019, Quebec (+1.2%) saw its largest population increase in 30 years, while Ontario (+1.7%) recorded one of the highest growth rates for the same period.”
Good thing Canada’s housing market has “no demographic legs to stand on”, except you know, population growth. https://www.theglobeandmail.com/real-estate/the-market/canadas-housing-boom-has-no-demographic-legs-to-stand-on/article25523999/
SandiJ
at 1:59 pm
I’d LOVE to know the name of the buyer’s solicitor. If it’s who I think it is, he’s defending all sorts of these cases (buyer didn’t close in 2017), coming up with all sorts of excuses and never winning. He then goes on to convince them to appeal, and still doesn’t win. This case isn’t on CanLII so can’t check.
It’s contract law – you bought it!
J
at 4:33 pm
http://www.ontariocourts.ca/decisions/2019/2019ONCA0925.htm
“Brian Sherman, for the appellant”
Kyle
at 6:38 am
You could be on to something. Seems very odd that in this case they didn’t try to work something else out long before the close date. I’ve heard of buyers and sellers renegotiating lower prices, longer closes, etc. This feels like they waited until closing to say they weren’t going to go through with the deal. Has the hallmarks of someone wanting out of the deal period and hoping that some smamry solicitor could protect them from consequences?
John
at 12:33 pm
How do you know the lawyer didn’t canvas the other side before launching the suit? It is typically to make a settlement offer before doing so as it can affect costs awarded.
Kyle
at 10:00 am
“On the day of closing, the appellant advised that she could not close, as she had been unable to sell her own home and could not obtain sufficient mortgage financing.”
This is in the Background Facts section.
Steve
at 3:06 pm
“The appellant’s offer was the second highest.”
Presumably because the highest offer had a condition, which begs the question – what’s the premium one would have to pay to win in a “hot” market with a condition on their offer and is that even feasible without a run on impact on ability to secure financing?
Either way here we see that while the risk of things going bad with this type of transaction has been slim for a long time, if you happen to be the one caught out when the music stops even if only for a moment the impact is absolutely life altering.
This is obviously the correct outcome from a legal perspective but I can’t help but feel for the plaintiff who acted just as the vast majority of buyers in this city have for years.
Steve
at 3:07 pm
Sorry, the appellant – not the plaintiff – I realize I had the parties backwards in regards to the original case.
John
at 12:35 pm
Really? You feel sorry for someone who decided to take on a risk? It’s not as if someone forced them to sign the contract! I guess you also feel sorry for those buy stocks knowing government interest rate policy and other acts can result in markets falling.
condodweller
at 1:52 am
it’s easy to get lulled into buying first and selling later after such a long up trend in prices. This boils down again to lack of financial literacy and people not doing the risk analysis. How can you not weigh the risk of the financial consequences of not being able to sell your home? I don’t mean the 600k but calculating the the final price required and sources of funding available without the sale of the home. Everyone should do a worst case scenario and accept the risk should it happen.
Steve
at 8:39 am
To me the situation with unconditional offers has basically become a self fulfilling prophecy. Everyone is doing it because everyone else is doing it. I suspect very few would actually be able to weather the downside they are exposed to if things went south, as they did here, regardless of how unlikely that might be
condodweller
at 2:33 pm
I get that the only way to win is with no conditions but buying first is a hedge against not finding a home if you sold first. What’s the down side there? You might have to move in with family and pay storage or god forbid rent for a few months. Isn’t that better than losing 600K? Also if you are stretched so thin that you can’t do a bridge financing for a few months perhaps you shouldn’t be buying that house in the first place?
Professional Shanker
at 6:46 pm
But coming up with $600k is something entirely different than what you are describing. I am sure most would be able to withstand $100k reduction in price if they had trouble selling their place, not $600k.
For the record I do think it is a risk to buy first and sell later but 99% of the time it is not a $600k decision.
Have you ever purchased and sold? Did you sell first and buy subsequently?
condodweller
at 7:16 pm
obviously this is an extreme case. But it could have been avoided if they came up with alternate financing other than the proceeds from their existing home.
I also wonder to what extent were they caught out i.e. they said they can’t close or refused to close and the seller just sold to someone else before they had a chance to reconsider.
It also could have been a perfect storm where the bank wanted a higher down payment. I also knew someone who had to come up with extra funds to close eve though they were pre-approved by the bank.
The only time I purchased and sold was when I bought preconstruction. My last sale was before I bought but that was before the hype.
Libertarian
at 9:25 pm
What happened to buying real estate in the GTA is a sure thing? I thought all it does is go up. I believe the term “capital appreciation” is continually thrown around in the comments on this blog.
Kyle Lin
at 9:45 pm
For the millionth time, no one on here has claimed that real estate only goes up – EVER! So can we all just stop making this bogus ass remark. Now let’s also be realistic. In over 20 years this is one single case of someone getting caught out. How much you want to bet there are way more examples of people in the last 20 years that have made at least $619, 112 in capital appreciation?
Libertarian
at 9:42 am
I take it then that you don’t read the comments on here. There are many bulls who like to laugh at bears out there because the market isn’t crashing and keeps going up. Someone even made the comment recently about how GTA real estate is better than stocks.
On an unrelated note: are there two Kyles on this blog? That would explain a lot.
Kyle
at 9:58 am
There is one Kyle…me I read most of the comments. Lots of people on here rightfully say the market is very unlikely to crash in the near future, and they support it with solid facts, data and logic. It’s pretty clear everyone who comments on here is aware that the market pulls back from time to time. No one on here has ever said the market only ever goes up and never ever goes down. To continue to falsely paraphrase what bulls say as such, is lazy Garth Turner-esque level arguing.
Are you posing a counter-argument? Are you suggesting that the bulls have been wrong all along, based on this single sample? Are you saying the market isn’t going up from here and that these types of law suits are some sort of new norm? What are you actually saying? If you have an actual point please state it and support it.
Libertarian
at 2:30 pm
I was making an observation – that’s all. It was about how one of the major themes of this blog and the bullish commenters is that GTA real estate will increase in value moving forward, but then turn around and say that there will be pullbacks from time to time when stories like this come out – saying the buyer screwed up.
I made the same comments when David wrote about this a couple of years ago. Why were people criticizing buyers for trying to move up the property ladder? After all, isn’t that what we’re all supposed to do? Especially in the GTA considering most people will be renting in a generation or two because houses will be so damn expensive.
I’m not a bull or a bear. I’m a homeowner and purchased during this bull run, so I was willing to overpay to secure that my wife and I (and now child) have a place to call home. What I don’t like is how extreme the bulls and bears are. So the advice by bulls that people can’t go wrong buying real estate is wrong as proven by this case. The advice by bears is also wrong. So I try to represent the average joe and want people to know that they should always do their homework. These stories are reminders of that.
Not every renter saves the difference and invests it. Not every landlord is making money. It’s not black and white.
Furthermore, I agree with CondoDweller’s comments on this post. Real estate agents can’t have it both ways. They can’t say “How was I supposed to know” when things go bad, but then say “I’m a professional who understands all the dynamics of the market, so you have to overpay by X% to secure this property.”
J G
at 2:40 pm
There are many examples. Check out HouseSigma’s feature “sold below bought”.
There are quite a few detached in North York sold this year for 1 million below the price they bought in 2017.
Kyle
at 3:03 pm
Now that is a much more articulate response then making up some phony claim and then falsely attributing it to people who comment here. Thank you.
I’m not so sure the problem is how extreme the views of the bulls or bears are, it feels to me like you have a very extreme interpretation of what you are reading.
GTA real estate can and has increased in value while experiencing pull backs from time to time. These are not mutually exclusive. If you look at the historical graph that is precisely what it has been doing ever since they started keeping track and no one here has claimed otherwise. So no one here is “turning around” and only acknowledging pull backs, when stories like this come out. Every regular bull commenter on here has acknowledged there have and will be pull backs from time to time long before this latest pull back. And no one is saying the buyer screwed up.
I don’t recall the discussion a couple of years ago, but again it sounds like your interpretation is far more extreme than what the actual discussion was about, because i don’t think anyone here has “criticized buyers for trying to move up the ladder”, they may have criticized certain actions or how buyers have gone about it, but those are two completely different things.
Kyle
at 3:09 pm
@ JG
I’m well aware that there are houses sold for less than they were last bought at, but to say there are “many” is a stretch. How many more houses do you think there are that sold for more than they were last bought at? I think the answer would be an order of magnitude higher.
Libertarian
at 4:22 pm
It’s not a phony claim. I know you consider yourself the King. or the Keeper, or the Police of the commenters on this blog, but I know how to read. You have your opinion. I have mine.
J G
at 5:43 pm
Yes I remember that. I was saying the performance of us blue chip stocks like Amazon and Google easily outperformed GTA Re over the past 15 years. But a bull said I was cherry picking lol.
Guess what, the FAANG is part of many mutual funds and ETFs so many people are invested in them even if they don’t know it.
I invest in both stocks and RE, there are advantages to both. But the best part I like about stocks over RE is I only have to login to my computer for 5 min each time I want a glance at the assets. While with RE you are paying property tax, insurance, and maintainemce (time or money)
Tudval
at 4:31 pm
Real estate is a necessity of life. Either living in it saves you from having to pay to rent or you can rent it out and make additional income. You probably forgot to add this to capital appreciation. You also probably forgot to take into consideration the favorable leveraging terms for RE vs stocks.
Sirgruper
at 11:37 pm
This type of thing was actually unfortunately too common in 2017. A huge point is missed in concluding that it was the second best offer and is a point that is missed by way too many real estate agents…the size of the deposit. A 5% deposit is common in Toronto (up north I’ve seen far less) and is totally inadequate for a seller with 13 offers. Why did the agent not speak up? The more volatile the market and the longer the closing, the greater the deposit should be for a seller. Also, when buying and if you want the property, try when being a buyer making a huge deposit if you have the cash. It makes the seller take notice and it cost you nothing. David, you might consider a post on deposits. It is hugely important and often ignored. I’ve even seen it beautifully used in a commercial setting where there was a first right of refusal. They gave a 100% deposit on a $3,000,000.00 property which effectively killed the first right of refusal.
condodweller
at 1:45 am
I love people’s logic that we are looking at one case therefore it only happened once.
Without knowing the timing of events it’s hard to understand how this went down. I mean, given the chance would they not have had the opportunity to raise funds i.e. bridge financing or alternate financing to allow them more time to sell their home? I know it’s 20/20 hind sight vision but surely they could have lowered the asking price on their home for a quicker sale so they didn’t have to lose $600k.
This deal smells of incompetence. I mean the market didn’t drop by 30%. Does this mean they over bid by that much? Or did the seller sell the house to a friend at a low price and let the buyer subsidize it knowing he will get the difference through court?
Christopher
at 8:03 am
The market did drop by 30%. 1.871 million was the first sale price and the sale that closed was for 1.252 million.
I can’t help but wonder how many people bidding 30-40 percent higher than what a home sold for the previous year were speculators and how many were regular home buyers who had really bad timing.
condodweller
at 10:26 am
i was thinking of the average numbers which as I recall went from high 900s to high 800s. which would be about just over 10%. In any case the percentage isn’t important. Don’t you find that 600k to be a huge number on the same house?
I think a lot of individuals bidding that much higher based on their agent’s advice. I have written about someone I know who very nearly ended up getting caught in this as they were the last one to sell in their area at the highest price. They would have been able to close but still it wouldn’t have been pleasant to receive significantly less for your home when you already bought expecting a certain amount.
Their agent was giving me examples of what houses sold for in the area and literally he worked out the increases by day and bid that much more on the next one.
Just like David highlighted recently how he values a home, i.e. prorate the annual increase to the number of days/weeks/months since the last sale, plus add a premium if you really want to be the winner.
When I asked him how long can this go on he didn’t know and didn’t seem to care much. He had no skin in the game. If the deal falls through, he can always sue for his commission, right?
David posed an interesting question: “How am I supposed to know” This question is eerily similar to what Sarah Connor asks the inventor of Skynet. Bonus point if you know the movie reference.
IMHO the answer is it depends. If the agent claims he is just an innocent bystander, he’s not supposed to know. If on the other hand he is providing advice, he is supposed to know by applying some basic reasoning and say I don’t think 20+% increases are realistic and it makes no sense for you to bid that kind of money without securing the funds first. If he advises not to put a condition in on financing, than the very least he could do is advise the client to sell first. If they don’t want to sell first, than ask the question, if they can survive it financially if they can’t sell their home after they committed to a purchase at an astronomical price.
There is a major conflict of interest here.
Steve
at 10:31 am
Indeed, the property in question is in East Gwillembury which is towards the outer reaches of the GTA where the the drop that did occur – however brief – was most pronounced.
condodweller
at 2:00 am
I still say that agents have some culpability in these situations. How many times would rely on the buyer to say if they want to sell first and how often would the agent suggest to buy first instead?
On one hand agents call themselves professionals but when something unexpected happens, as David admits with his recent sales, they just say how was I supposed to know. It’s so convenient to advise someone to buy first, and when the $hit hits the fan, take a step back and say, hey I’m just the sales guy, I had nothing to do with it.
M
at 3:31 pm
Agents have no culpability nor want to accept any standard of responsibility.
They are the first to trot out a “Sold 115%” over ask sign/flyer/ad, but anything sold under ask is a “I’m not sure what happened” as David mentions here.
In my own experience, I sold a loft with an experienced Bosley agent who promised the world. “One of a kind, amazing, will sell quick, here’s the number, holdback on listing to get a bully before coming to MLS….”. After a few weeks, with lots of traffic, but no offers it was “well, you know the layout, neighborhood, number of bathrooms, revise your expectation…”
Agents have no incentive to be truthful or held accountable.
I’d welcome any agent that would actually put their money where their mouth was.
I propose a situation where an agent and seller would agree on a target selling price and selling date, and any deviation results in a bonus or hit to the commission. Sell for 110% of target or by bully offer?, get 2.5% + $5000. Sell for 90% or past a certain date? Get 2.5% – $5000.
It’s far to easy for agents to pressure to sell, accept an offer, list at a price (how quickly does “trust me, list low to get multiples” turn to ….”well that’s what it’s worth”), and then backtrack while still getting paid.
The commission model is broken. The work is done, so even if the selling price is lower the commission is paid and there’s little incentive to do more for marginal gains.
Geoff L.
at 5:19 pm
There are so many things that could be said about this situation, and being “close” the original transaction I notice lots of missing or misstated information.
But this comment by “M” (why not use your real full name?) is the typical misinformed whining about Realtors not necessary related to the original post. I agree that a big number of the roughly 57K TREB Realtors shouldn’t be. But to suggest the Realtors don’t have skin in the game is false. Who do you think pays for the professional staging and photos? Who pays for the advertising? Who pays for the things the Realtor believes gives the seller the best shot for success? The Realtor. So they are putting out their own money for this stuff with no guarantee of return. Often sellers simply decide not to sell, or to cancel and relist with someone else.
As for motivation to accept a lower price…perhaps. But if a Realtor’s compensation moves in sync with the selling price then isn’t there more incentive to get as much as possible?
One thing I do agree on with “M” is variable commission structures that reward performance ie. if a Realtor sells for vastly more than an the seller’s expectations and/or does it faster then perhaps they deserve more that the original 2.5%. However this type of arrangement is specifically prohibited in Ontario.
Anyway, there are a lot of lessons to be learned from this scenario, not the least of which is that choosing a Realtor does in fact matter. Had the sellers in this situation hired a less capable/competent Realtor it’s unlikely their case would have been as legally solid as it was.
Perhaps the biggest takeaway is that we should act more like grown ups and live up to our commitments. Maybe then we’d take a closer look at those commitments before making them.
Marina
at 11:27 am
It’s so important for buyers to read this kind of story to clarify their obligations. There are too many people who think they should be able to get out of a deal because they want to.
Once you sign the contract, you have to follow through. Such is life.
“Oh, the government did something. I need to cancel.”
“I got a job offer in Vancouver and I don’t want to buy in Toronto anymore. Gimme my deposit back.”
“I bought the condo with my boyfriend, but I caught him banging my sister – can we back out?”
No, no, and sorry, but no.
Jennifer
at 1:24 pm
Many knew the government was making a big announcement before they did. It was all over the news, certainly by April 3, 2017. How could they not foresee that it may have consequences on the market? The situation sucks, but it didn’t come out of the blue.
John
at 12:09 pm
Winning party is likely not going to collect any or all of the judgement. They can file a writ if the losers own property but won’t get paid until it is sold. The losers also might file for bankruptcy.