If a seller refuses to close on your London property purchase, your lawyer will “tender” the transaction to prove you were ready. You can then file a civil lawsuit at the Superior Court of Justice to either force the sale through “specific performance” or sue for your financial damages and temporary living costs.
You have packed your boxes, arranged the moving truck, and transferred your down payment. But on closing day, the seller suddenly refuses to hand over the keys. Whether they could not find a new place to live, or property values in London unexpectedly spiked and they want to sell for a higher price, a seller backing out of a firm Agreement of Purchase and Sale is a severe breach of contract. This stressful scenario requires immediate, aggressive legal intervention to protect your massive financial investment and hold the defaulting seller accountable.
Step-by-Step Process in London, Ontario
When a real estate deal collapses, the clock starts ticking instantly. You must follow strict Ontario civil procedures to ensure you do not accidentally forfeit your own legal rights while dealing with the seller’s breach.
Step 1: “Tendering” the Transaction
On the scheduled closing day, your real estate lawyer must legally prove that you were 100% ready, willing, and able to complete the purchase. They will sign all mortgage documents, hold your down payment in trust, and formally “tender” these items to the seller’s lawyer. This official step acts as undeniable proof that the seller-not you-is the one who caused the deal to fail. 🗂
Step 2: Mitigate Your Personal Damages
Under Ontario law, you have a duty to minimize your financial losses. If you suddenly have nowhere to live, you should find reasonable temporary accommodation (like a short-term rental or a hotel in London) and rent a storage unit for your belongings. Keep every single receipt, as these “out-of-pocket” expenses will form the core of your lawsuit against the seller.
Step 3: Send a Formal Demand Letter
Before launching a costly lawsuit, your litigation lawyer will quickly draft a demand letter. This letter gives the seller a very short, strict deadline to either close the transaction or face severe legal consequences, including being sued for all your additional living expenses and legal fees.
Step 4: Register a Certificate of Pending Litigation (CPL)
If you absolutely want this specific house and do not just want your deposit back, your lawyer can apply to the Superior Court of Justice (located at 80 Dundas Street) for a Certificate of Pending Litigation. When registered on the property title, a CPL effectively freezes the home. The seller cannot legally sell it to a new buyer for a higher price while your lawsuit is active. 🔒
Step 5: File a Lawsuit for Breach of Contract
If the seller remains stubborn, you must formally issue a Statement of Claim. You can ask a judge for “specific performance” (an order forcing them to sell the house to you) or for financial damages (the cost of finding a similar home in London plus your temporary living expenses). 💰
How Much Does it Cost in London?
Pursuing a defaulting seller through the Ontario civil justice system requires a substantial upfront financial commitment. It is crucial to evaluate these costs with your legal team.
| Type of Expense | Estimated Cost (CAD) |
|---|---|
| Temporary Housing & Storage | Varies heavily (You must pay this out-of-pocket initially) |
| Court Filing Fee | $243 (To issue a Statement of Claim at the Superior Court) |
| Motion for a CPL | $339 (Court fee for a Notice of Motion to register the title freeze) |
| Litigation Retainer | $5,000 – $15,000+ (Upfront deposit for your lawyer’s time) |
| Full Trial Costs | $30,000 – $80,000+ (If a settlement is not reached beforehand) |
While you can ask the judge to order the seller to reimburse your legal fees at the end of a successful trial, the court rarely awards 100% of your actual legal costs.
How Long Does the Process Take?
The initial response happens incredibly fast. Your lawyer will “tender” the deal on the actual afternoon of closing, and a CPL can often be requested and registered within a week.
However, securing a final court order is a very slow process. Due to heavy backlogs at the London courthouse, if the seller fights the lawsuit, it can take anywhere from 2 to 4 years to reach a full civil trial. Because of this massive delay, the vast majority of these disputes are settled out of court through mediation long before a judge intervenes. 📅
Frequently Asked Questions (FAQ)
How do I get my deposit back?
Your deposit is safely held in the real estate brokerage’s trust account. It cannot be released until both you and the seller sign a Mutual Release form, or until a judge issues a final court order demanding its return.
What are the chances of getting “Specific Performance”?
Historically, Ontario courts only grant specific performance (forcing the sale) if the property is highly unique, such as a rare heritage property in Woodfield or a commercial plot with specific zoning. If it is a standard subdivision home, the court usually awards financial compensation instead.
Can I just buy a different house and sue for the difference?
Yes, this is very common. If you are forced to buy a similar home in London for $50,000 more than your original contract because the market went up, you can generally sue the defaulting seller for that $50,000 difference as part of your damages.
Do I still have to pay my real estate lawyer if the deal fails?
Yes. Your real estate lawyer completed the title search, prepared the mortgage documents, and tendered the deal on your behalf. You will still owe them for their services, but you can include their invoice in your lawsuit against the seller.
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