What Happens If the Buyer Doesn't Close on Time in New Brunswick

You accepted an offer, set a closing date, maybe even packed your boxes. Then the date passes and the buyer has not closed. It is stressful, especially if you have a place to move to or your own purchase depends on this sale.

This article explains the usual choices a seller has in New Brunswick: giving time, sending notice, dealing with the deposit, ending the deal and relisting, and possibly seeking compensation. What you can actually do depends heavily on your signed agreement, so treat this as a map and not a verdict.

This article covers the law of New Brunswick.

Start with your agreement of purchase and sale

The agreement is the main document. It usually sets the closing date, the conditions that had to be met, what counts as default, and what each side can do if the other defaults. Two sales can look alike and still lead to very different results because the wording differs.

Before you act, read it closely for these points:

• The exact closing date and any time stated for closing.
• Whether time is stated to be important, and any wording about default.
• Any notice requirements, such as how and when notice must be given.
• Any conditions (financing, inspection, sale of the buyer's home) and whether they were removed.
• What the agreement says about the deposit if the deal does not complete.
• Any clause about damages, costs or interest for late closing.

Missing the date is not always the same thing as the buyer walking away. A delay caused by paperwork or a lender may be fixable, while a refusal to close is a different problem. Your lawyer can tell you which one you appear to have.

Extensions and giving notice

If the buyer is genuinely trying to close, many sellers agree to a short extension. An extension changes your deal, so put it in writing and have everyone who signed the original agreement sign it. Be clear about the new date, and whether you can charge for extra costs, such as interest or additional carrying costs, during the delay.

Be careful about informal promises such as an email saying "take your time." Depending on the wording of your agreement, that could make it harder to later say the buyer is in default. If you want to keep your options open, a lawyer can help you word an extension so it preserves your rights.

If the buyer will not close, or keeps asking for more time, the next step is often a written notice. What it should say, how it must be delivered and how long you must wait before acting usually come from the agreement and general contract law. Because a mistake here can weaken your position, it is a step worth having a lawyer review.

What happens to the deposit

Most deposits are held by the real estate agent. In New Brunswick, an agent who receives a deposit on a trade in real estate must hold it as trustee for all parties according to their rights under the offer or contract, not as agent for one party. An agent may act for one party and receive the deposit for that party only if the offer or contract says so and every other party acknowledges it in writing.

An agent must pay deposit money into the trust account without delay. A cheque received with an offer need not be deposited until the offer is accepted, and then it must be deposited without delay.

Money cannot be drawn from the trust account except in accordance with the terms on which it was received, so a brokerage cannot simply release a disputed deposit to one side. If the parties dispute a deposit, the agent may, and if necessary to resolve the dispute shall, pay it into court on an interpleader.

Whether you are entitled to keep the deposit after a failed closing depends mainly on what your agreement says about default and on the facts. It is not something you can safely assume, so avoid telling the buyer or the brokerage that the money is yours until you have confirmed your position.

Ending the deal, relisting and claiming losses

If the buyer is in default and you decide to end the agreement, how you do that matters. Ending the contract wrongly can expose you to a claim from the buyer. Confirm that the agreement allows it, that you have given any notice it requires, and that you are following the proper steps before you relist.

Some sellers relist only after the legal position is clear, so that a second buyer is not caught up in a dispute over the first deal.

If the delay costs you money, you may be able to claim your losses under the agreement. Possible losses can include carrying costs, a lower price on a later sale, or extra moving or interest costs. Whether you can recover them, and how much, depends on the agreement and the evidence. Keep records of everything you spend.

Remember that you stay responsible for the property in the meantime. Each person in whose name real property is assessed must pay the taxes on it, and taxes are due when the real property tax notice is mailed. Keep your insurance, utilities and any mortgage payments up to date.

What to do next

A missed closing can move quickly. A few calm, organized steps will protect your options.

• Get your signed agreement and every amendment, notice and email about closing.
• Ask your lawyer what happened on the closing date and whether any documents are missing on either side.
• Do not sign an extension or send a termination until you understand your agreement.
• Contact the brokerage in writing about the deposit and ask how it is being held.
• Keep a record of added costs from the delay, with receipts.
• If you have your own purchase depending on this sale, tell your lawyer right away.

Closing involves registering the deed, and in New Brunswick electronic registration is generally done by a lawyer who is a subscriber with Service New Brunswick. That is one more reason to bring your lawyer in early, before you decide whether to wait, extend or end the deal.

Frequently asked questions