Buyer Failed to Close in Ontario: What the Seller Can Do

Your closing day arrived — and your buyer didn't. Maybe financing fell through at the last minute, maybe they simply went silent, or maybe they walked away without explanation. Whatever the reason, a buyer who fails to close in Ontario puts you in a stressful legal and financial position. You have a mortgage to discharge, a new home to close on, and no sale to show for it.

The good news: Ontario law gives sellers meaningful remedies when a buyer breaches an Agreement of Purchase and Sale. The bad news: what you can recover depends heavily on what you do in the hours and days right after the failed closing. This article walks you through your options.

What Counts as a Failure to Close?

A buyer "fails to close" when they do not complete the transaction on the agreed closing date — typically by failing to deliver funds (or a mortgage in good standing) through their lawyer before the registry cut-off. Missing a condition waiver deadline can also effectively kill a deal.

Sellers sometimes assume that simply not hearing from the buyer's lawyer is enough. It is not. You need to take active steps to protect your legal position.

Step 1: Contact Your Real Estate Lawyer Immediately

The moment closing does not happen as scheduled, call your lawyer — not your real estate agent. Your lawyer needs to:

• Confirm the buyer is in default (obtain written confirmation from buyer's counsel if possible)
• Issue a Notice of Default to the buyer, putting the breach on record
• Advise whether any grace period applies under the agreement
• Preserve your ability to re-list or accept another offer without losing your remedies

Delay can hurt you. Ontario courts have found that sellers who quietly sit on a failed deal can complicate their own damage claims.

Step 2: Understand Your Two Main Remedies

Remedy 1 — Keep the Deposit

Most Agreements of Purchase and Sale in Ontario include a clause entitling the seller to forfeit the buyer's deposit if the buyer defaults. The deposit is typically held in trust by the listing brokerage (or, less commonly, the seller's lawyer).

Forfeiting the deposit does not require a court order in most cases — but it does require:

1. A clear breach by the buyer
2. Proper demand to the holder of the deposit
3. Either the buyer's written consent to release, or a court order if the buyer disputes the forfeiture

If the buyer signs a mutual release agreeing to forfeit the deposit, the release is final. Never sign a mutual release without your lawyer reviewing it. Releases often contain broad language waiving your right to sue for additional damages — which brings us to Remedy 2.

Remedy 2 — Sue for Damages

If the deposit does not cover your actual loss, you can sue the buyer for the difference. Typical damages include:

• Carrying costs: mortgage payments, property taxes, utilities, and insurance you paid while the property sat un-sold
• Re-listing and re-marketing costs: agent commissions, staging, photography
• Price difference: if the property ultimately sold for less than the original agreement price, that shortfall is recoverable
• Legal fees: sometimes, though not always, awarded by a court

You do not have to choose between the deposit and suing — you can pursue both, but the deposit amount will be credited against any damages award.

Step 3: Re-List the Property (But Carefully)

Ontario law requires a seller to mitigate their losses — that means taking reasonable steps to re-sell the property rather than leaving it vacant. If you refuse reasonable re-listing opportunities out of spite, a court may reduce your damages.

Mitigation does not mean you must accept the first lowball offer. It means acting in good faith to get fair market value. Keep records of every showing, every offer received, and every price reduction decision.

What About Specific Performance?

Specific performance — a court order forcing the buyer to complete the deal — is theoretically available to sellers but is almost never granted. Courts grant specific performance when money damages are genuinely inadequate (the classic case: unique property the seller cannot replace). From a seller's perspective, you usually want money, not a forced buyer. Your lawyer can advise whether specific performance is worth pursuing in your specific situation.

Common Mistakes Sellers Make After a Failed Closing

• Accepting a verbal promise to close "in a few days" without a signed extension agreement — this can waive the breach
• Releasing the deposit before getting legal advice — once released, that money is gone
• Signing a mutual release without understanding what you're giving up
• Failing to document mitigation steps, undermining a future damages claim
• Missing limitation periods — Ontario's default limitation period for civil claims is two years from when you knew (or ought to have known) of the loss

Frequently asked questions