Buyer Won't Close: What Ontario Sellers Can Recover

A buyer who signs a firm agreement of purchase and sale and then refuses to close is in breach of contract. In Ontario, the seller is generally entitled to keep the deposit and to recover the further losses the breach causes. How the seller handles the days around the failed closing often shapes what can be recovered later.

First, be ready to close

The seller's own position on the closing date matters. A seller who wants to hold the buyer responsible should be ready, willing and able to complete the sale on the agreed terms. That means having the transfer, discharge arrangements and closing documents in order.

Where the buyer has signalled that it will not close, the seller's lawyer will usually confirm in writing that the seller is ready to complete. In many cases a formal tender is made on the closing date, documenting that the seller performed its side of the bargain. Even where the law may not strictly require a tender, the record it creates is valuable if the buyer later blames the seller.

In Adeniji v. Maqbool et al., 2025 ONSC 213, where our firm acted for the seller, the seller's lawyer confirmed in writing on the closing date that all closing documents had been delivered, including the statement of adjustments and the undertaking to discharge the mortgage, and the buyers admitted the tender. The court rejected the buyers' claim that alleged misstatements in the listing entitled them to rescind, held that they had breached the agreement and found that they had forfeited their deposit. The seller obtained judgment for $256,208.54 plus interest.

Accepting the buyer's repudiation

A buyer's refusal to close is a repudiation of the agreement. The seller then has a choice: hold the buyer to the contract, or accept the repudiation, treat the agreement as at an end and claim damages. Most residential sellers choose the second route because it frees them to sell to someone else.

In Darmanin v. Dhiman, 2024 ONSC 233, where our firm acted for the seller, the buyer asked for a $275,000 price reduction a week before the extended closing date. The seller refused and tendered, the buyer did not, and the seller then advised the buyer that he was electing to terminate the agreement and claim damages.

The election should be made clearly and in writing, usually through counsel. Sellers should be cautious about signing a mutual release, which may give up the very claims they intend to pursue. Extensions can be negotiated, but the terms should be documented carefully so the seller's rights are preserved if the extended date also fails.

Keeping the deposit

As a general rule, a buyer who fails to close without lawful excuse forfeits the deposit. The seller does not have to prove a loss equal to the deposit in order to keep it. Relief from forfeiture is available only in exceptional circumstances.

If the brokerage holds the deposit in trust, it will usually not release the funds without a direction signed by both parties or a court order. Where the seller's losses exceed the deposit, the deposit is credited against the damages and the seller sues for the balance.

Relisting and the duty to mitigate

A seller who claims damages must take reasonable steps to reduce the loss. In practice, that means relisting the property within a reasonable time, pricing it in line with the market and responding sensibly to offers. Keeping records of listing prices, price changes, showings and offers received is important.

The standard is reasonableness, not perfection. A defaulting buyer who argues that the seller should have sold sooner or for more bears the burden of proving both that the seller failed to make reasonable efforts to mitigate and that mitigation was possible.

In Menon v. Simpson, 2025 ONSC 6720, where our firm acted for the seller, the property was relisted two weeks after the breach, the price was reduced several times and leasing was also considered. The court held that the buyer, who filed no appraisal or expert evidence, had not shown a failure to mitigate, and that the seller was not required to accept a later offer that depended on a $2 million vendor take-back mortgage. The buyer was ordered to pay the $1,835,000 resale shortfall plus $550,000 in agreed carrying costs, a total of $2,385,000 plus interest.

Courts have also held that a seller is not obliged to keep dealing with a buyer who has already defaulted. In Darmanin, the court rejected the buyer's argument that the seller should have accepted her later offer at a reduced price, noting that she had no evidence she could have closed at that price or any price. In Singh and Kaur v. Feneich, 2024 ONSC 5776, another case in which we acted for the sellers, the court held that the sellers were not required to negotiate with a buyer they had little confidence could complete the purchase, and found that they had acted reasonably in relisting and selling.

How damages are measured

The aim of a damages award is to put the seller in the position it would have been in had the sale closed. The usual heads of damage include:

• the difference between the original contract price and the price obtained on resale

• carrying costs from the failed closing date to the resale, such as mortgage interest, property taxes, insurance and utilities

• additional legal fees and other costs of the second sale, including added commission where the seller can show it

• other losses that were reasonably foreseeable, such as bridge financing costs incurred because the sale proceeds did not arrive

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In Singh and Kaur, the court assessed the sellers' damages at $366,513: the $287,500 resale shortfall, $31,906 in carrying costs and $47,107 in added interest on a high-interest private loan they needed to complete the purchase of their new home. The buyer's $50,000 deposit was credited against that amount.

In Darmanin, the court awarded $456,696.24, made up of the $435,000 resale shortfall plus carrying costs including mortgage and bridge loan interest, and set off the $125,000 forfeited deposit against that amount. It also held that bridge financing is reasonably foreseeable because sellers are usually also buyers of other properties. Each claim must be supported by documents, so sellers should keep statements, invoices and closing records from both transactions.

Timing

A seller who accepts the repudiation does not need to wait for the resale before starting a claim. The damages, however, often cannot be finally calculated until the property is resold. Under the Limitations Act, 2002, the basic limitation period is two years from the day the claim was discovered.

For a failed closing, sellers should assume the clock is running from the scheduled closing date and get advice well before the deadline.

Delay also carries practical risks. A buyer's financial position can deteriorate, and evidence about the market and the seller's resale efforts is easier to assemble while it is fresh.

Summary judgment is the usual route

Most of these claims are brought in the Superior Court of Justice as an action for breach of contract. Because the facts are often documented and the buyer's breach is clear, the seller can frequently move for summary judgment rather than wait for a trial. Under rule 20.04(2)(a) of the Rules of Civil Procedure, the court shall grant summary judgment where it is satisfied that there is no genuine issue requiring a trial.

Each of the four decisions discussed above was decided on a summary judgment motion our firm brought for the seller, and we also obtained summary judgment for the seller in Bowie v. Bhandari. In Menon, the court held that a buyer opposing the motion must put its best evidence forward, and that a large amount in issue does not by itself make a trial necessary.

Outcomes depend on the facts and evidence in each case, and a buyer can defeat a motion by showing a real issue for trial. Still, a well-prepared motion is often the most efficient path to judgment.

How we can help

We act for sellers across Ontario whose buyers have failed to close, from the closing date through to judgment and enforcement. If your buyer has backed out, contact us early so the steps you take now support your claim later. Learn more about our Real Estate Litigation practice or contact us to arrange a consultation.

General information only, not legal advice. Every matter turns on its own facts. Past results do not guarantee a particular outcome.