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Mark’s follow-up to the earlier piece about the 3.3. million deal that went wrong. Robert.
Be sure you fully understand the details before closing a real estate deal.
By Mark Weisleder |
Putting your home up for sale can be a tough decision, but once made and the ball is rolling, you may not be able to change your mind. Last week’s column about a $3.3 million home sale that went wrong for the seller prompted several related questions from readers.
Here they are:
Is there a buyer’s remorse period in Ontario?
If you are buying a new condominium from a builder, you have 10 days to change your mind. You do not need a reason. This does not apply if you buy a new house from a builder and does not apply if you are buying a resale home or condominium. Why condos only? The clause is included in the Condominium Act.
Can a buyer sign an offer and then walk away?
The Ontario real estate contract gives a buyer 24 hours to pay the deposit, once the offer is accepted by the seller. The buyer cannot just change their mind or they can be sued.
For example, the buyer offers $300,000 for a house which is accepted. The buyer changes his mind and doesn’t pay the deposit and walks away from the deal. The seller resells the property for $275,000. They can still sue the first buyer for the difference, or $25,000.
Can buyers use conditional clauses as escape hatches?
Most real estate contracts are conditional on the buyer being able to get a mortgage and being satisfied with a home inspection. Other conditions include being satisfied with a condominium status certificate when buying a resale condo.
Many buyers think these conditions give them the right to just change their minds. It is not that easy. The case law has demonstrated that buyers must try and satisfy any condition in good faith. This means that you need a legitimate reason why you found the home inspection report or condominium status certificate unsatisfactory.
Who gets the deposit when buyers change their mind?
In most cases, the deposit is held by the seller’s real estate brokerage, in trust. Under the law, when a deal breaks down, the brokerage cannot pay the deposit to anyone without either a mutual release or direction signed by both the buyer and the seller, or an order of the court. As such, when deals do not close, if there is no agreement, the deposit can be locked up for a long time, and the buyer will not have access to it to make an offer on another property.
Is there a “legal” way for a buyer to get out of a deal?
It depends. If for example, there was a right on your title for the City to access 20 per cent of your property for any reason, known as an easement, and that was not disclosed to the buyer, they can usually cancel the agreement without penalty. However, there have been other cases that indicate if there is a problem with a city work order or title problem for which the seller can obtain title insurance to protect the buyer, then the buyer cannot refuse to close. A buyer can also cancel if there has been substantial damage to the property before closing, such as a flood that was not repaired. You can’t refuse to close if the oven is not working.
The better answer in all of these situations is to be very careful and serious before you make any decision to buy a home. Changing your mind later can be very expensive.