Freezing a Caledon Property Sale With a Certificate of Pending Litigation

The situation

Kofi ran a dental practice with several staff on payroll, and had spent two years looking for a second location to expand into. His business partner Kwame owned a handful of franchise restaurant locations across the region and wanted commercial space nearby for a new outlet. Together they signed an agreement of purchase and sale for a freestanding commercial building in Caledon, owned by Ifrah, for roughly $1,250,000. They paid a deposit of about $75,000, held in trust pending closing, and began planning renovations for both the dental practice and the restaurant unit.

The agreement was firm — no financing or inspection conditions remained outstanding, and a closing date was set roughly ten weeks out. Kofi and Kwame started giving notice to their current landlords and lining up contractors, treating the deal as settled. Kofi had already told his dental staff the second location would open within the year, and Kwame had begun sourcing kitchen equipment for the new restaurant unit. Neither of them had ever bought commercial property together before, and the deal represented most of the expansion capital both businesses had set aside for the year.

The problem

About three weeks before closing, Kofi and Kwame's own lawyer at the time received a letter from Ifrah's new lawyer. Ifrah had received an unsolicited offer from another buyer for roughly $1,400,000 — about $150,000 more than the price Kofi and Kwame had agreed to pay — and wanted out of the original deal. The letter offered to simply return the deposit, as though that closed the matter.

In Ontario, a signed agreement of purchase and sale for real property is a binding contract, and a seller cannot walk away from it just because a better offer arrives later. Real property is treated by the courts as unique — no two parcels of land are considered interchangeable — which means a buyer whose seller breaches the agreement can sue for specific performance, an order compelling the seller to complete the sale, rather than being limited to money damages. Returning the deposit does not undo the breach; it is not a right the seller has under a firm agreement, and accepting it back would have signalled that Kofi and Kwame were walking away from their claim to the property itself.

But specific performance claims carry a practical risk: while the lawsuit works its way through the Superior Court, the seller remains free to sell the property to someone else, mortgage it, or otherwise deal with it — potentially leaving the buyer with an unenforceable judgment against a property they no longer control. Court proceedings of this kind routinely take a year or more to reach trial, and Ifrah's competing buyer was ready to close within weeks. With another buyer already circling at a materially higher price, Kofi and Kwame needed to freeze the property before Ifrah could act on it, or their legal claim would outlive their practical chance of ever owning the building.

What we did

1. Registered a certificate of pending litigation the same week. A certificate of pending litigation, often called a CPL, is a notice registered on the property's title that alerts anyone dealing with the land — a new buyer, a lender, a title insurer — that a lawsuit claiming an interest in that specific property is underway. Once registered, it becomes practically impossible for the seller to complete a sale to anyone else or refinance the property, because no lender or purchaser's lawyer will proceed with a clouded title. We commenced the underlying lawsuit for specific performance and moved to register the CPL immediately, before Ifrah could close with the competing buyer.
2. Preserved the deposit and documented the firm agreement. We confirmed the deposit remained held in trust rather than being returned, and assembled the paper trail showing the agreement was unconditional and validly signed by both sides — the foundation of any specific performance claim.
3. Anticipated a motion to discharge the CPL. Sellers facing a certificate of pending litigation often bring a motion asking the court to remove it, arguing the buyer's claim is weak or that damages would be an adequate remedy instead of forcing a sale. We prepared Kofi and Kwame's evidence — the business case for that specific location, the lease notices already given, the renovation planning underway — to show why money alone would not fairly replace the property they had contracted to buy.
4. Opened settlement discussions in parallel. Litigation over a certificate of pending litigation is expensive and slow for both sides, and a motion to discharge it, if it proceeded, would have added months of legal costs before either party knew whether the CPL would survive. We used the leverage the CPL created — Ifrah could not close with the higher offer while it stayed registered — to bring the seller's lawyer to the table early, rather than waiting for a motion date.
5. Negotiated toward a resolution both sides could accept. Ifrah's position was that keeping the property tied up indefinitely risked losing the competing buyer altogether and left the property unsellable to anyone in the meantime. Kofi and Kwame's position was that they had a signed agreement and a real claim to the property itself, not just a claim for money. We worked toward a settlement that reflected the real leverage on each side rather than an all-or-nothing court outcome, walking Kofi and Kwame through what a trial would likely cost in time and legal fees against what a negotiated number could deliver within weeks instead of the better part of a year.

The outcome

After roughly seven weeks of negotiation under the CPL, the parties reached a settlement. Kofi and Kwame agreed to discharge the certificate of pending litigation and release their claim to the property, allowing Ifrah to proceed with the higher-priced sale to the other buyer. In exchange, Ifrah paid Kofi and Kwame a settlement amount of about $180,000, on top of the return of their full $75,000 deposit, and covered a contribution toward their legal costs.

The settlement figure reflected both the roughly $150,000 gap between the two offers and the real costs Kofi and Kwame had already incurred — lease termination arrangements with their existing landlords, renovation planning fees, and the time lost searching for the location in the first place. It did not give them the property, and it did not match what a full trial victory on specific performance might theoretically have delivered. But a trial was not a certain outcome; courts do have discretion to decline specific performance and award damages instead, particularly where a buyer's claim to needing that exact property can be disputed, and Kofi and Kwame would have faced a year or more of litigation costs and uncertainty either way.

Within a month of the settlement, Kofi and Kwame used the funds toward a deposit on a different property roughly fifteen minutes away, and restarted their expansion planning from there — later than intended, but on a foundation they controlled outright rather than one still tied up in a courtroom.

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