What Can You Do If the Seller Refuses to Close in Alberta?

You signed a purchase contract, removed your conditions, and the completion date has arrived. Then the seller says they will not close. That is stressful, especially if you have sold your own home or arranged a mortgage around that date.

This article explains in plain terms what generally happens to your deposit, what the main remedies are, where a caveat fits in, and what to do first. Your options depend heavily on the wording of your signed contract, so a lawyer should review it.

This article covers the law of Alberta.

Start with the contract and the paper trail

Whether a seller's refusal to close is a breach of your purchase contract depends on what the signed contract says, including any conditions in it, such as a home inspection condition. Whether it is, and what you can do about it, turns on what the contract says and on what has happened since you signed. Alberta government guidance notes that a standard contract is used for residential purchases and sets out the buyer, seller, property details and financing terms, including the deposit amount.

Before you react, collect the facts. Sellers sometimes refuse because of a dispute over a condition, a repair, or a title problem, and the reason matters when a lawyer assesses your position.

What happens to your deposit

Money a brokerage holds for you is trust money. A licensee must keep it separate from the licensee's own money and must keep it on deposit in Alberta, with an exception for licensees with business premises in Lloydminster.

Trust money may be paid out only in accordance with the Rules and the terms of the trust, and those terms must be in writing and agreed to by the licensee and all other parties. In practice, a brokerage holding your deposit cannot simply hand it to one side because that side asks. Release follows the purchase contract or a written direction.

Interest on a deposit held in a brokerage trust account is paid to the Alberta Real Estate Foundation, so neither buyer nor seller receives it. You can also ask the brokerage for a statement of receipts and disbursements for your trust money, which it must give within a reasonable time after you ask, unless otherwise agreed.

Specific performance, damages and a caveat explained

These terms come up often when a seller will not close. They are explained here in general terms only. Whether any of them is available to you depends on your contract, the facts and the court's discretion.

• Specific performance: a court order requiring a party to complete the contract, in this case to transfer the property to you.
• Damages: money to compensate you for losses caused by the breach, such as extra costs you had to pay.
• Return of your deposit: getting back the money you paid in trust, which follows the written terms of the trust.
• Caveat: a notice registered on the land title that signals your claimed interest in the property.

On caveats, the guidance is specific for one situation: for a new home bought from a builder, a buyer who paid a deposit to the builder may register a caveat on the land title to protect it. Whether a caveat is available in a resale purchase depends on the facts, so ask a lawyer before you try to register one.

Time limits and new condominium purchases

A claim, for example for breach of a purchase contract or return of a deposit, must be brought within 2 years after the claimant first knew, or ought to have known, of it, or 10 years after the claim arose, whichever expires first. Other provisions may affect a particular contract claim, so do not assume the 2 years is the whole story.

If you bought a new condominium unit from a developer, special rules apply. The developer must hold your money in trust until title is issued, deposit it in an Alberta trust account within three days excluding holidays and Saturdays, and keep it on deposit in Alberta. If the developer has not met the conditions for releasing your money, the corporation or an interested party may apply to the Court for an order for payment out, and the Court may direct who is paid, appoint an administrator or receiver, and award costs.

What to do next

• Keep a copy of the signed contract, all amendments and every message with the seller and the brokerages.
• Get the seller's refusal in writing if you can, and note the dates.
• Ask the brokerage to confirm in writing that your deposit remains in trust and to give you a statement of it.
• Do not sign any direction releasing your deposit until you understand its effect, since release follows written terms.
• Speak to a real estate lawyer promptly, before time limits become a concern.

Frequently asked questions