The closing date is usually the final step in the purchase or sale of a home. However, the closing very often (even more so since the onset of the ongoing COVID-19 pandemic) may be required to be extended.
The completion (or lack thereof) of the real estate transaction on the originally agreed upon closing date is a very important term of the Agreement of Purchase and Sale between the Seller and the Buyer. Accordingly, whenever there is the need for a deviation of the agreed-upon closing date there are a number of considerations that should be taken into account on a closing.
The recent decision of the Ontario Court of Appeal in Ching v Pier 27 Toronto Inc. (2021 ONCA 551) addressed closing considerations such as “time being of the essence,” “repudiation,” and “relief from forfeiture of deposits”.
Time being of the essence is the idea that there is only a certain amount of time in which the transaction must close. The Court of Appeal in Ching states that “when time is of the essence and neither party is ready to close on the agreed date the agreement remains in effect” and “either party may reinstate time of the essence by setting a new date for closing and providing reasonable notice to the other party” (at para 52).
Repudiation, or a breach, is when a buyer or a seller in a real estate transaction fails to meet one or more of the terms of the Agreement of Purchase and Sale. The Court of Appeal in Ching states that repudiation alone does not terminate a contract, the repudiation must be accepted by the innocent party for the contract to be terminated (at para 32).
Relief from forfeiture of deposits is a remedy the Courts can use that allows a buyer or seller that repudiated a real estate contract to have their deposit returned. The Court in Ching also referenced a number of legal tests to be utilized if relief from forfeiture of deposits was sought.
Accordingly, the Ontario Court of Appeal decision in Ching will likely set the standard for future determinations of liability with respect to varying of closing dates, and anyone considering varying the closing date of their real estate transaction should consider the decision in Ching before doing so.
For more information about varying closing dates or assistance with real estate purchase or sale transactions, please contact our firm for a free initial consultation with one of the lawyers at Refcio and Associates.
Please be advised that the information contained in this blog is for general information purposes only, and should not be treated as legal advice. Every legal situation is different, and the information contained in this blog may not apply to your particular set of circumstances. If you would like a free initial consultation tailored to your circumstances, please follow THIS link (https://www.rrlaw.ca/london/) to contact our office.