Their Buyer Walked Away Four Days Before Closing

The situation

Abena, a retired business owner, and Etienne, a surgeon, had lived in their Stoney Creek home for more than two decades before deciding to downsize. They listed in the spring, accepted a firm offer of roughly $1,850,000 from a buyer named Dov within the first two weeks, and took a deposit of about $92,500. No financing condition, no home inspection condition — Dov's agent presented him as a cash-strong buyer in a hurry to close before a job relocation. Abena and Etienne, in turn, signed a firm agreement of purchase and sale to buy their own next home, timed to close a week after their sale.

Ten days before closing, Dov's lawyer sent a short letter: their client would not be able to complete the purchase. No explanation was owed and none was given in detail, though the broader story was not hard to guess — comparable listings in the area had softened noticeably since the offer was signed, and word later reached the sellers that Dov's own financing had fallen through when a lender revalued the property below the agreed price. Whatever the cause, the result was the same: a firm deal, ten days from closing, with no buyer behind it.

Abena and Etienne now faced two closings colliding badly. Their own purchase was still firm and still closing on schedule. Without Dov's money, they had no way to fund it. They called us the same day the letter arrived.

What the review found

When a buyer fails to close in Ontario, the agreement of purchase and sale usually gives the seller two remedies, and it is important to understand how they interact. The first is the deposit: it is generally forfeited to the seller the moment the buyer defaults, regardless of what happens afterward. It is not conditional on the seller proving a loss. The second is a claim for damages — the seller can sue the defaulting buyer for the shortfall between the contract price and what the property eventually sells for, plus reasonable carrying costs incurred because of the delay, such as mortgage interest, property tax, insurance and utilities on a home that should already have been sold. The deposit is credited against whatever a court or settlement ultimately awards; it does not sit on top of it.

There is a catch that surprises many sellers: the law expects them to mitigate. A seller cannot simply let the property sit unsold and run up carrying costs indefinitely, then bill the defaulting buyer for all of it. The property has to be relisted and marketed reasonably promptly, at a realistic price, and any recovery is measured against what a diligent resale actually achieved — not against a wished-for price the seller never tested in the market.

For Abena and Etienne, the arithmetic mattered immediately. Their own purchase was closing in roughly two weeks and could not simply be walked away from without similar consequences on their side. We helped them arrange short-term bridge financing secured against the Stoney Creek property to complete their purchase on schedule, while the sale property went back on the market. That decision protected their own closing but added real carrying costs — bridge interest on top of two sets of property expenses — for as long as the Stoney Creek home sat unsold.

The property relisted within days, at a price a local appraisal supported as realistic for the softened market rather than the figure Dov had agreed to months earlier. It sold about eleven weeks later for roughly $1,690,000 — about $160,000 below the original agreed price. Added to that was close to $22,000 in carrying costs and bridge interest for the extra eleven weeks. Against a total loss of roughly $182,000, the retained deposit of $92,500 left a shortfall of about $89,500 that only a claim against Dov could recover.

What we did

1. Confirmed the deposit was properly retained. We reviewed the agreement to confirm the deposit had been received in trust and that Dov's default entitled Abena and Etienne to keep it outright, without needing to prove any loss before doing so.
2. Advised on the duty to mitigate before it became urgent. Rather than waiting to see whether Dov might reconsider, we recommended relisting immediately at a price supported by current market evidence. A seller who delays, or who relists too high out of frustration, risks a court later reducing the damages award on the view that a prompter or more realistic resale would have limited the loss.
3. Tracked every carrying cost with documentation. Mortgage interest, property tax, insurance, utilities and the bridge financing interest were all logged with dates and receipts from the moment the failed closing was confirmed. Damages claims in these cases are won or lost on documentation — a shortfall figure is only as strong as the paper behind it.
4. Sent a formal demand once the resale closed. With an actual resale price in hand rather than an estimate, we set out the full calculation for Dov — contract price, resale price, carrying costs, and the deposit already retained — and gave him a deadline to respond before litigation began.
5. Issued a statement of claim in the Superior Court. The shortfall exceeded the Small Claims Court's monetary limit, so the claim proceeded in the Superior Court. We issued it well within the two-year limitation period that runs under the Limitations Act, 2002, but did not wait needlessly — delay only weakens a mitigation argument and gives a defendant more room to dispute the numbers.
6. Negotiated a settlement before trial. Dov's lawyer disputed part of the carrying-cost claim and argued the resale price should have been higher. After an exchange of appraisal evidence and a settlement conference, the parties agreed on a payment that covered most, but not all, of the outstanding shortfall.

The outcome

Dov agreed to pay a settlement of roughly $63,000, on top of the deposit already retained. Combined, Abena and Etienne recovered about $155,500 of the roughly $182,000 they had lost in resale price difference and carrying costs — leaving a net loss of about $26,500 that was never recouped. That gap reflects the ordinary reality of settlement: both sides gave up something to avoid the cost, delay and uncertainty of a trial, and Dov's own financial position made a larger judgment difficult to collect in full even if they had won every disputed dollar in court.

The process took just over a year from the failed closing to the signed settlement — a timeline that is typical for Superior Court litigation of this kind, even when liability is not seriously in dispute. Abena and Etienne's own purchase closed on schedule throughout, because the bridge financing arranged in the first week meant it never depended on collecting from Dov first.

This is what a mitigated outcome looks like in a failed-closing case: a real loss, but one contained by moving quickly, documenting carefully, and pursuing the claim methodically rather than letting frustration or delay erode the position further. Sellers who wait to relist, who skip the appraisal evidence, or who let a demand letter sit unanswered for months typically recover less — not because the law is against them, but because the evidence supporting their damages gets weaker with every month that passes.

What you can learn from this