Seller Refuses to Close in Ontario: A Buyer's Legal Options

You found the home, signed the Agreement of Purchase and Sale, arranged your mortgage, hired movers — and then the seller called to say they're not closing. Maybe they got a better offer, maybe they changed their mind, or maybe they're hoping you'll just walk away quietly. A seller who refuses to close in Ontario leaves a buyer in a genuinely painful situation: you may have already sold your current home, have nowhere to move, and face a housing market where comparable properties cost more than what you agreed to pay.

Ontario law does not leave buyers without recourse. Here is what you can do.

First: Lock In Your Legal Position

The moment you learn the seller is refusing to complete, call your real estate lawyer. You need to:

• Confirm you are ready, willing, and able to close — your lawyer should put this in writing to the seller's lawyer on or before the closing date
• Document the breach — keep every email, text, voicemail, and conversation note
• Do not sign anything the seller or their agent sends you without legal review, including any "mutual release"

Being on record as ready to close is critical. If you cannot later prove you were prepared to complete, a court may find you were equally in breach.

Remedy 1: Sue for Specific Performance

Specific performance is a court order requiring the seller to complete the sale on the agreed terms. Unlike a damages award (money), specific performance delivers what you actually bargained for: the house itself.

Ontario courts grant specific performance when:

1. The property is unique — meaning money cannot adequately compensate you for losing it. Courts have found residential homes to be unique in many circumstances, especially in a tight market where a comparable replacement is not readily available.
2. You are ready, willing, and able to close your side of the deal
3. Damages would be inadequate — for example, if comparable homes now cost $100,000 more, or the property has features that cannot be replicated

Specific performance is not automatic, and courts exercise discretion. The more you can show that comparable alternatives are truly unavailable or much more expensive, the stronger the claim.

Registering a Certificate of Pending Litigation

When you launch a specific performance claim, your lawyer can register a Certificate of Pending Litigation (CPL) — sometimes called a lis pendens — on title to the property. A CPL effectively clouds the title and prevents the seller from conveying the property to anyone else while the litigation is ongoing. It is a powerful tool, but courts can order it removed if your claim is weak or if you cannot demonstrate a genuine interest in the land.

Remedy 2: Sue for Damages

If you decide (or a court decides) that specific performance is not appropriate, you can claim monetary damages instead. Recoverable amounts may include:

• The price difference: the gap between your agreed purchase price and what you ultimately paid for a comparable replacement property
• Extra carrying costs: costs of temporary housing, storage, or extending your mortgage commitment while you searched for a replacement
• Wasted transaction costs: legal fees, home inspection fees, appraisal fees, and mortgage application costs you paid in anticipation of closing
• Moving costs incurred and wasted

You generally cannot claim both specific performance and damages — you must elect one remedy, though you can keep both alive early in the litigation until the situation becomes clearer.

Remedy 3: Get Your Deposit Back

Your deposit should be held in trust by the listing brokerage. If the seller is clearly in default, the deposit should be returned to you. However:

• If the seller disputes the default, the brokerage will not simply release the funds — you may need a court order or the seller's consent
• If the seller signs a mutual release returning the deposit, read it carefully: mutual releases often contain language that prevents you from suing for anything else

Never treat the deposit return as the end of the matter if you have larger losses. Talk to your lawyer before signing anything.

What If the Seller Has a Genuine Excuse?

Sellers sometimes claim they cannot close because of an estate issue, a title problem, or a third-party delay. Some of these are legitimate and require creative problem-solving rather than litigation. Others are manufactured excuses. Your lawyer can assess whether the seller's stated reason justifies an extension (with a written amendment to the agreement) or whether it is simply a breach you should pursue.

Mitigation: Your Duty to Limit Loss

Even though the seller breached, you have a legal duty to mitigate your damages — to take reasonable steps to find a replacement property rather than sitting on your losses. This does not mean you must accept the first available substitute. But if you turn down a genuinely comparable home at a similar price, a court may reduce your damages on the theory that you could have limited your loss.

Keep records of your property search: listings you viewed, offers you made, and prices in the market at the time.

Timeline and Limitation Periods

Ontario's general limitation period is two years from the date you knew (or ought to have known) you had a claim. For real estate breaches, that clock typically starts on the date of the failed closing. Do not delay seeking legal advice — the stronger your case, the faster you want to get on record.

Frequently asked questions