Buyer Missed the Closing Date in Ontario: What the Seller Can Do

A closing date passes and the buyer has not closed. For a seller, that can be stressful, especially if you have a move planned or a mortgage payout hanging over you.

This article outlines the main options in general terms: checking the agreement, giving notice, keeping the deposit, reselling and claiming losses. Each case turns on its own facts and wording, so a lawyer should review your agreement before you commit to a course.

First, confirm the buyer is truly in default

Before calling it a default, check the facts. Was the closing date a business day? Registration is not allowed on statutory or government holidays, and a statutory time limit that would expire on a holiday is extended to the next day that is not a holiday. Whether that extends a contractual closing date depends on the wording of your agreement.

• Read the closing date, any extensions and the business-day wording in the agreement.
• Find out whether the delay is the buyer's, the buyer's lender's or a document problem.
• Confirm your own side is ready: discharge of your mortgage, documents and vacant possession if required.
• Keep copies of every email, text and letter between the agents and lawyers.

If you also failed to be ready, your position changes, so be honest with your lawyer about it.

Notice and the time-is-of-the-essence clause

Some agreements include wording that makes the closing dates especially important. Whether your agreement says this, and what notice you need to give before treating the buyer as in default, depends on its exact terms. Your lawyer can confirm what, if anything, needs to be sent to the buyer.

Avoid informal promises such as saying a few extra days is fine. How informal promises might affect your position depends on your situation, so it is worth confirming with a lawyer. If you are willing to extend, do it in writing through your lawyer.

The deposit

Where a buyer repudiates the deal and fails to close, the deposit is forfeited without the seller having to prove loss, because the deposit stands as security for performance. That is often the first and simplest remedy.

A buyer may ask a court for relief from forfeiture. The test has two parts: whether the forfeited deposit was out of all proportion to the damages the seller suffered, and whether it would be unconscionable for the seller to keep it. A larger deposit relative to your actual loss can make this argument more likely to come up, so keep records of what the delay costs you.

Reselling and claiming losses

Many sellers want to resell quickly. Whether and when you can safely list again depends on whether the first agreement has properly ended, so check with your lawyer before accepting a new offer. Reselling at a lower price may leave a shortfall, and whether you can recover it from the first buyer depends on your situation, so it is worth confirming with a lawyer. How much you can recover depends on the case, and a lawyer can confirm how the rules apply.

Delay also creates costs of its own. If you must pay out a mortgage because you are selling, a prepayment penalty can apply, and carrying costs continue while the home sits unsold. Keep a running list of these costs, with receipts, because they may form part of a claim.

What to do next

• Gather the signed agreement, any amendments, the deposit receipt and all correspondence.
• Contact your lawyer the same day you realise the buyer may not close.
• Ask your lawyer whether a notice is needed and what it should say.
• Do not accept a new offer or make public statements until you know whether the first agreement has ended.
• Track every extra cost caused by the delay, including interest and moving expenses.
• Talk to your agent about relisting only after getting legal direction.

A short conversation with a lawyer early on usually costs less than fixing a mistake later. If the property has a tenant, mention that too, since a buyer who takes title steps into the landlord's role.

Frequently asked questions