What Happens When a Real Estate Contract Is Broken in Ontario
When a real estate contract is broken, it means one party has failed to meet their obligations under a legally binding agreement. This can include a buyer backing out of a deal after conditions have been waived, a seller refusing to close on the agreed date, a landlord failing to provide a habitable rental unit, or a tenant breaching lease terms by subletting without permission. It may also involve missed deadlines, financing issues, or disputes over what was included in the sale of a property.
Real estate contracts are designed to clearly set out what each party has agreed to do, how it must be done, and within what timeframe. When those terms are not followed, the other party may have legal options depending on whether the breach of contract was minor or substantial.
Common Situations Where a Real Estate Contract Is Broken
Most disputes arise from real estate purchase agreements, but a real estate contract is broken in many situations other than buying and selling homes. While purchase agreements are the most common source of disputes, breach of contract can also happen in rental and lease agreements, commercial property arrangements, or land use and boundary agreements. A breach of contract may involve something like failing to close on time, not delivering clear title, renting out a property that does not meet legal standards, or allowing a sublease that is not permitted under the agreement.
Proving The Breach of a Real Estate Contract
When a real estate contract is broken and legal action is considered, certain elements generally need to be proven. There must be a valid contract in place, the non-breaching party must have complied with their own obligations, and the breach must be significant rather than a minor technical issue. It must also be shown that the breach of contract caused measurable financial loss. Working with a real estate litigation lawyer is essential at this stage, as these cases often depend on careful legal analysis and strong supporting evidence.
Key Terms in Real Estate Purchase Agreements
Because real estate involves the transfer of land, purchase agreements must be in writing and signed. These contracts typically include essential terms such as the purchase price, deposit, financing details, closing date, property address, and what is included or excluded from the sale. Disputes often arise when one of these terms is not honoured and legal remedies may need to be explored.
Legal Remedies When a Real Estate Contract Is Broken in Ontario
When a real estate contract is broken in Ontario, the remedies available depend on the wording of the contract, the seriousness of the breach, and whether the buyer or seller is affected. Many Ontario real estate agreements, including standard forms used by the Ontario Real Estate Association, contain clauses that require the parties to attempt mediation or another form of dispute resolution before starting a lawsuit. A real estate litigation lawyer can review the agreement to determine whether these steps are mandatory and whether they have been properly followed.
If court action is permitted, Ontario courts may award monetary damages to compensate the non-breaching party for losses directly caused by the breach of contract. For buyers, this may include out-of-pocket expenses, differences in market value, or costs related to financing and inspections. Sellers may seek damages for lost sale proceeds or additional carrying costs such as mortgage payments, property taxes, and utilities.
In some cases, the court may order specific performance, which requires the breaching party to complete the transaction as agreed. In Ontario, buyers more commonly seek this remedy, particularly when the property is considered unique and monetary compensation would not be adequate. Courts will consider factors such as fairness, the conduct of both parties, and whether enforcing the contract is reasonable in the circumstances.
If a buyer breaches the agreement, the seller may be entitled to retain the deposit, depending on the terms of the contract and the nature of the breach. In Ontario, deposits are often treated as forfeited upon breach of contract, but this can be challenged in certain situations, especially if the amount is excessive or the breach is minor. A real estate litigation lawyer can assess whether retaining or recovering a deposit is legally justified.
For other types of real estate contracts, such as leases or land use agreements, remedies may include terminating the agreement, seeking compensation for losses, or asking the court to undo the contract altogether.
Working with a real estate litigation lawyer ensures that any remedy pursued is appropriate under Ontario law and that your rights are protected at every stage of the dispute.
Why Working with a Real Estate Litigation Lawyer Matters
When a real estate contract is broken, the financial stakes can be high, and the legal process can be complex. A real estate litigation lawyer can review the contract, explain available options, ensure all procedural requirements are met, and advocate on your behalf if the dispute goes to court or alternative dispute resolution.
At Gionet Fairley Wood LLP, our experienced real estate litigation lawyers assist clients throughout Simcoe County, Muskoka, Grey Highlands and surrounding areas. Contact us through our website, or call us today at 705-468-1088.
***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.