The recent verdict in Nguyen v. Zaza, 2023 ONCA 34, by the Court of Appeal for Ontario, shines a light on certain crucial aspects surrounding conditions waiver in a real estate agreement of purchase and sale (APS). The court’s verdict underscores a few fundamental legal principles:

• A seller needn’t hold the property title at the APS signing, as long as they can provide a clean title at the transaction’s closure.
• A buyer who gives up their conditions in an APS is tied to their contractual duties and can’t invoke external elements to dodge closure.
• A deposit acts as a safety net for the buyer’s adherence to the contract, and if the buyer doesn’t close, the seller takes the deposit.
• A seller can rightfully deny extending the closing time if the buyer is seeking an extension due to a lack of funds.

Rewind to December 19, 2020, when the APS was inked between the buyer and seller. At that moment, the property title was under the seller’s father’s name. In simpler terms, the APS mentioned the title holder’s son (the seller) and the buyer as parties.

The APS had a stipulation that the deal would wrap up by 6:00 p.m. latest on November 15, 2021. The APS was dependent on two conditions: the buyer securing funds and a satisfactory home check. However, on January 6, 2021, the buyer let go of these conditions.

On January 18, 2021, the seller’s father, who held the property’s actual title, handed it over to his son, the APS’s seller.

Fast forward to the closing date, November 14, 2021. The seller brought forth the necessary paperwork for closure. Yet, the buyer didn’t present the required purchase amount.

The buyer contended that the APS should be seen as an agreement between her and the seller’s father, given that he held the property title when the APS was signed. She further claimed that the seller wasn’t justified in asking her to fulfill the APS on the closing date as she believed it was a pact between her and the seller’s father. The buyer asserted that the seller should have sought her agreement for the January 18, 2021 title transfer. Basing her arguments on these points, she claimed she wasn’t to blame for the failure to close the sale.

The Ontario Court of Appeal asserted that though the seller signed the APS with the buyer on December 19, 2020, the property title didn’t need to be in his name at that moment. He simply needed to ensure a good title could be handed over to the buyer at closure.

Moreover, the court highlighted that the seller was capable of transferring the legal title to the buyer on the closing date (November 15, 2021) because the property was passed to him on January 18, 2021. However, the buyer didn’t present the necessary purchase price at closure.

The court further noted that without a specific clause in the APS about the deposit’s disposal, the deposit acts as a guarantee for the buyer’s contractual performance and is forfeited to the seller if the buyer fails to close. Hence, the court granted the seller the $50,000 deposit, cancelled the registered caution and certificate of pending litigation (CPL) on the property, and ordered the buyer to cover the seller’s appeal costs of $7,500.

If you’re curious about how an APS could affect your future, Bhoj Law Office is ready to help. Please get in touch with Bhoj Law Office!