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Real Life Examples of Forfeited Real Estate Deposits

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I've talked before about what happens to real estate deposits when a deal doesn't close.  Basically, if it's the buyer's reason the deal doesn't close, then the seller gets to keep it unless it can be shown that this would be an unconscionable result.  In the past few weeks a few cases have come out showing the practical realities of this situation, with a couple of potential buyers losing some substantial deposts.

 

The first is an Ontario case: Thomas v. Carreno, 2013 ONSC 1495.  Here, a Toronto buyer lost a $100,000 deposit, because they refused to close until an open building permit was taken care of.  When the issue was taken care of around 4:00 pm the day of closing, the buyers lawyer appears to have ignored the confirmation fax from the vendor's lawyer, missing the deadline to close.

The second is B.C. case: Amiri v. One West Holdings Ltd., 2013 BCCA 155.  The buyer in this case put down a $745,325 deposit on a new-build condo, with a total price that was a bit under $3 million.  Because the buyer was out of the country, and then had some trouble getting his wife's signature to his mortgage company in time to close the deal, the deal fell apart.  Here the trial judge, and the the BC Court of Appeal, held that he had to forfeit the deposit.

This is a harsh lesson for both buyers, who are now out some pretty substantial amounts, where they get nothing in return.  And it should serve as a lesson to anyone putting a deposit down on a property - make sure you're ready and able to go through with the deal, since it's not as easy as just cancelling the deal and getting your deposit back.

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