Real Estate Deposits
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What are your rights and remedies as a party to a agreement of purchase and sale that fails to complete?
Generally the largest and most complicated agreement most people enter into during their lives is one relating to the purchase and sale of their home. While over the years these agreements have been standardized and simplified in terms of a person’s ability to enter into them, the law in respect to the problems that can arise after a breach by either the Vendor or the Purchaser are wide ranging and complex.
One of the first steps in the completion of an Agreement of Purchase and Sale is the payment of the deposit which subject to the cost of the house or the agreements between the parties can be a substantial sum. The most common issue that arises both in respect to alleged breaches of Agreements of Purchase and Sale is who gets to have the deposit if things do not work out and what is the position of the Real Estate Brokerage or Lawyer that normally holds these funds in trust pending the proposed sale of the subject property. As to this last issue the Broker or the Lawyer is essentially a middle man and must be an uninvolved party insofar as the deposit monies are concerned, these are trust monies and as such cannot be released to either party without written consents and releases and/or an Order of the Court.
The issue as to who is entitled to the deposit funds upon the failure of an Agreement of Purchase and Sale to complete or the breach of such an agreement are not so straight forward and can result in complicated and complex reviews of the agreement itself, any implied terms or collateral agreements and of course the determination of which party breached the agreement or failed to complete same.
The initial position of the Courts in respect to deposits paid in furtherance of an Agreement of Purchase and Sale that is not completed is what is normally considered as common knowledge insofar as the deposit is forfeited by the Purchaser to the Vendor if the Purchaser fails to complete the purchase as agreed or returned to the Purchase if the Vendor cannot proceed. However as indicated above this area of the law is complex and subject to numerous variables that can either result in both the forfeit of the deposit plus additional damages to the Vendor if the Purchaser fails to complete or in the alternative return of the said deposit to the Purchaser if the agreement fails to complete as a result of some breach of the terms of the Agreement of Purchase and Sale either express or implied by the Vendor plus damages. In a nutshell the issues that can impact the failure of an Agreement of Purchase and Sale to complete is who breached the said agreement or who breached it first.
The questions arising from the above concerns as indicated can be many and varied and involve such issues as;
The above are simply examples of issues and conduct that can impact the return or forfeiture of a deposit in this complex area of law. Thus if you find yourself as a Vendor unable to secure the release of a deposit paid in furtherance of an Agreement of Purchase and Sale and wish to know your rights and the remedies available to you in the Small Claims Court or if you are a Purchaser attempting to obtain the return of a deposit wrongly withheld and wish to know your rights and remedies in the Small Claims Court contact us either by phone or email.
Don’t wait to find out your rights and remedies in a failed agreement of purchase and sale. Contact us today for a consultation and see how we can help resolve your real estate deposit dispute. Schedule a time now.