If a buyer or seller improperly backs out of a real estate transaction in London, Ontario, you can file a civil lawsuit for breach of contract. For damages exceeding $50,000 CAD, the claim must be filed at the Superior Court of Justice, which requires a standard filing fee of $243 CAD.
Buying or selling a home is often the largest financial transaction a person will make in their lifetime. When a real estate deal collapses in London-whether a buyer fails to secure financing and walks away on closing day, or a seller suddenly refuses to hand over the keys-the financial fallout can be devastating. Navigating a breached Agreement of Purchase and Sale requires swift action and a deep understanding of civil litigation in Ontario. This guide outlines the steps you must take to protect your equity, recover your losses, and hold the defaulting party legally accountable.
Step-by-Step Process in London, Ontario
A failed real estate transaction usually involves standard forms created by the Ontario Real Estate Association (OREA). Because the stakes are incredibly high, attempting to navigate this process without professional legal counsel is strongly discouraged.
Step 1: Mitigate Your Damages Immediately
Under Ontario law, if you are the seller and the buyer backs out, you have a strict legal duty to “mitigate your damages.” This means you must actively try to minimize your financial loss by putting the property right back on the London real estate market and attempting to sell it for the best possible price. You cannot simply sit back and sue for the entire original purchase price. 🗂
Step 2: Have a Lawyer Send a Demand Letter
Before rushing to the courthouse, your real estate litigation lawyer will usually draft a formal demand letter. This letter will outline the specific breach of contract, demand the release of the deposit held in the brokerage’s trust account, and threaten formal legal action if a settlement is not reached quickly.
Step 3: Issue a Statement of Claim
If the defaulting party ignores the demand, your lawyer will draft and file a Statement of Claim. Since real estate damages (like the loss of value on a home) almost always exceed $50,000, this document must be filed at the Superior Court of Justice located at 80 Dundas Street in London. This formally initiates the civil lawsuit.
Step 4: Register a Certificate of Pending Litigation (CPL)
If you are the buyer and the seller backed out, your goal might be to force them to sell you the home (a legal remedy called “specific performance”). Your lawyer can apply to register a Certificate of Pending Litigation on the property’s title. This effectively freezes the property, preventing the seller from selling it to anyone else while the lawsuit is ongoing.
Step 5: Discovery and Pre-Trial
Once the lawsuit is underway, both parties will engage in the discovery process, exchanging all relevant documents, emails with real estate agents, and mortgage applications. Afterward, a pre-trial conference is held where a judge will try to help both sides reach a settlement before heading to a costly, full-blown trial.
How Much Does it Cost in London?
Real estate litigation in the Superior Court is notoriously expensive. You must weigh the potential legal fees against the actual damages you suffered when the deal fell through. 💰
| Type of Expense | Estimated Cost (CAD) |
|---|---|
| Court Filing Fee | $243 (To issue the Statement of Claim) |
| Motion for a CPL | $339 (Court fee for a Notice of Motion to request title freeze) |
| Lawyer’s Hourly Rate | $300 – $600+ (Varies by London law firm) |
| Litigation Retainer | $5,000 – $15,000 (Upfront deposit for legal work) |
| Full Trial Costs | $30,000 – $100,000+ (If the case goes all the way) |
Remember that the losing party in Ontario is frequently ordered to pay a portion of the winning party’s legal fees. However, this is never guaranteed and rarely covers the entirety of your legal bill.
How Long Does the Process Take?
In the immediate aftermath of a collapsed deal, getting the property relisted or filing a CPL can happen within a matter of days.
However, if the matter proceeds through the formal civil justice system, you must be prepared for a marathon. Because of significant backlogs at the Superior Court in London, a complex real estate lawsuit can easily take 2 to 4 years to reach a final trial. This is why the vast majority of these cases are settled out of court during mediation or pre-trial conferences. 📅
Frequently Asked Questions (FAQ)
What happens to the deposit if the buyer walks away?
The deposit remains legally locked in the real estate brokerage’s trust account. It cannot be released to the seller or returned to the buyer until both parties sign a Mutual Release, or a judge issues a final court order dictating where the money goes.
Can the seller just keep the deposit automatically?
Usually, yes, if the buyer breaches the contract without a valid legal condition (like a failed home inspection). Ontario courts generally rule that deposits are forfeited to the seller if the buyer walks away, even if the seller ultimately sells the house for more money later.
What is “Specific Performance”?
Specific performance is a court order forcing the seller to complete the transaction and transfer the property to the buyer. Courts in Ontario rarely grant this unless the property is considered completely “unique” and money alone cannot compensate the buyer.
Can I sue my real estate agent if the deal falls through?
You can only successfully sue your agent or brokerage if you can prove they were negligent, breached their fiduciary duty, or failed to include critical protective clauses (like a financing condition) contrary to your explicit instructions.
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