In Ontario’s real estate market, backing out of a deal after it becomes firm can lead to more than just disappointment — it can trigger serious financial and legal consequences.
Whether you're buying your first home or navigating a complex transaction, it's crucial to understand your obligations once you sign on the dotted line.
When Does a Deal Become “Firm”?
A real estate deal typically includes certain conditions — such as financing approval, home inspection, or the sale of an existing home.
Once those conditions are waived or fulfilled, the deal becomes firm. At this stage, you’re legally bound to complete the transaction.
What If You Back Out?
If you back out after a firm deal, the consequences can be significant:
1. Loss of Deposit
Your deposit — which can be tens of thousands of dollars — may be forfeited. The seller can claim it as compensation for the failed transaction.
2. Lawsuits for Damages
If the seller relists the property and sells it for less than your offer, they can sue you for the difference, along with other related damages.
3. Additional Costs
You may also be held responsible for:
Legal fees
Mortgage interest costs
Real estate commissions
Other carrying costs the seller incurred due to the failed deal
What If Something Changes?
Life happens — maybe you lost your job, your mortgage approval was revoked, or you're simply having second thoughts.
Here’s the key: act fast and get legal advice immediately.
There may be options such as:
Assigning the agreement to another buyer
Negotiating a mutual release with the seller
Seeking remedies through your financing institution or legal counsel
The Bottom Line
Backing out of a real estate deal in Ontario is not a decision to take lightly. Once the deal is firm, you’re under a legal obligation to close. Failure to do so can lead to serious financial penalties and legal action.
If you’re unsure or something changes after your offer is accepted, don’t delay — speak with a real estate lawyer or your REALTOR® right away. The sooner you act, the more options you may have.
Need help navigating your real estate transaction?
I’m here to guide you through every step — with clarity, confidence, and the right legal support when needed.
📞 Contact me today to discuss your options.
DISCLAIMER
The content provided is for informational purposes only and is based on information available at the time during which it was created. No recommendations are express or implied either directly or indirectly. Do not rely on this content to make business or financial decisions or decisions otherwise. Always consult with a professional to seek advice relevant to your individual situation. Not intended to solicit contracted clients.