Failed Closings & Deposit Disputes
When a real estate deal goes wrong.
Property Counsel is a Toronto real estate litigation firm representing buyers, sellers, and property owners in disputes arising from real estate transactions across Ontario.
Real estate disputes can be time-sensitive. Timely, informed guidance helps clarify your options.
Types of Disputes We Handle
Real estate litigation across Ontario.
Time is critical
Limitation periods apply to all real estate disputes in Ontario
Under Ontario’s Limitations Act, 2002, most real estate claims must be commenced within two years of the date the claim was discovered. Some claims have shorter timelines. If you believe you have a dispute, do not wait — contact us to confirm your limitation period before it expires.
01
Failed Closings — Buyer Default
When a buyer fails to close on the agreed date, the seller has several potential remedies. These include retaining the deposit as liquidated damages, commencing an action for damages for carrying costs, additional sale losses, and legal fees, or in appropriate circumstances, seeking specific performance to compel the buyer to complete the purchase. Time is critical. The seller’s response in the days immediately following a failed closing significantly affects their legal position and available remedies. We advise sellers on their options and act quickly to preserve their rights.
02
Failed Closings — Seller Default
When a seller fails or refuses to close, the buyer may seek specific performance — a court order requiring the seller to complete the transaction — or alternatively claim damages for the difference between the agreed purchase price and the current market value of the property, together with other losses. Buyers should act immediately to register a Certificate of Pending Litigation (CPL) on title to prevent the seller from dealing with the property while the dispute is ongoing. We move quickly on these matters to protect the buyer’s interest in the property.
03
Deposit Disputes
Disputes over the release of deposits held in trust are among the most common real estate disputes in Ontario. When a transaction fails to close, the question of who is entitled to the deposit — and under what circumstances — is frequently contested. Under the Trust in Real Estate Services Act, 2002 (TRESA), deposits must be held in a brokerage’s trust account and cannot be released without mutual consent of the parties or a court order. We represent both buyers seeking return of their deposit and sellers seeking to retain it as damages.
04
Property Defects — Latent & Patent
Ontario law distinguishes between patent defects — visible defects a buyer could discover on reasonable inspection — and latent defects — hidden defects that are not reasonably discoverable and that render the property dangerous or unfit for habitation. Sellers are not required to disclose patent defects, but they are legally prohibited from actively concealing latent defects. Where a seller knew of a latent defect and failed to disclose it, the buyer may have a claim in misrepresentation or fraudulent concealment. We assess the nature of the defect, the seller’s knowledge, and the available remedies — including rescission of the transaction or damages.
05
Misrepresentation
Misrepresentation in a real estate transaction can take three forms: innocent misrepresentation (a false statement made without knowledge of its falsity), negligent misrepresentation (a false statement made without reasonable grounds for believing it to be true), and fraudulent misrepresentation (a deliberate false statement made with intent to deceive). Each type carries different legal consequences and available remedies, ranging from damages to rescission of the Agreement. We assess the specific facts of your situation and advise on the strongest available claim.
06
New Home & Condo Disputes — Tarion & Condominium Act
Buyers of new homes in Ontario have statutory protections under the Ontario New Home Warranties Plan Act, administered by Tarion. These include warranty coverage for deposit protection, delayed closing compensation, and construction defects. Buyers of new condominiums have additional protections under the Condominium Act, 1998 — including the right to rescind a purchase agreement following a material change to the disclosure statement. We advise buyers navigating Tarion warranty claims and developers’ obligations under the Condominium Act, and represent clients whose rights under these statutes have been breached.
07
Title Disputes & Encroachments
Title disputes arise when competing claims to ownership or use of land are asserted — including boundary disputes, encroachments by neighbouring structures, adverse possession claims, and disputes over easements or right-of-way. These matters can affect your ability to use, sell, or mortgage your property. We advise property owners on their rights and remedies, and represent clients in proceedings before the court or the Ontario Land Tribunal where required.
08
Realtor & Agent Negligence
Real estate agents and brokerages owe a duty of care to their clients. Where an agent fails to meet the professional standard of care — including failure to disclose material facts, negligent pricing advice, failure to communicate offers, or conflicts of interest — they may be liable in negligence. These claims can be pursued in court as civil actions for damages, and in some cases may also give rise to regulatory complaints before RECO or TRREB. We assess whether the conduct meets the threshold for a negligence claim and advise on the most effective course of action.
What You Need to Know
Common questions about failed closings
and deposit disputes in Ontario.
What happens if the buyer doesn’t close in Ontario?
If a buyer fails to close on the agreed date, the seller may retain the deposit as damages and pursue additional losses through litigation — including carrying costs, price differences on a subsequent resale, and legal fees. In some cases, the seller may also seek specific performance. The seller should not re-list or re-sell the property without legal advice first, as doing so may affect their ability to claim certain damages.
Can I get my deposit back if the deal falls through?
It depends on why the deal fell through and who was at fault. If the buyer was unable to satisfy a financing condition in good faith, the deposit is typically returned. If the buyer simply refused to close without a legal basis, the seller is generally entitled to retain the deposit. If the seller failed to close, the buyer is entitled to the return of their deposit and potentially additional damages. We assess the specific circumstances of your transaction to advise on your entitlement.
Can I sue a seller for not disclosing a defect in Ontario?
Potentially yes, depending on the nature of the defect and what the seller knew. Ontario law does not require sellers to disclose all defects, but sellers cannot actively conceal latent defects — hidden defects that make the property dangerous or unfit for habitation. If a seller knew of a latent defect and failed to disclose it, or made a false statement about the property’s condition, you may have a claim in misrepresentation or fraudulent concealment. The strength of your claim depends on the facts — contact us to discuss your situation.
What is specific performance in a real estate dispute?
Specific performance is a court order requiring a party to complete a transaction as agreed. In Ontario, courts assess whether damages would be an adequate remedy before granting specific performance. It is most commonly sought by buyers when a seller refuses to close — particularly where the property has unique characteristics or has increased significantly in value. An application must be made promptly and a Certificate of Pending Litigation registered on title.
What is a Certificate of Pending Litigation and when do I need one?
A Certificate of Pending Litigation (CPL) is a document registered on title to a property that alerts the public to an existing or pending legal claim involving that property. When registered, it effectively prevents the owner from selling or mortgaging the property without dealing with the claim. A CPL should be considered immediately when a seller refuses to close or attempts to re-sell the property — without one, a third-party purchaser for value without notice may defeat your claim.
How long do I have to bring a real estate dispute claim in Ontario?
Under Ontario’s Limitations Act, 2002, the basic limitation period is two years from the date the claim was discovered or ought to have been discovered. Some claims — including certain Tarion warranty claims and claims under the Condominium Act — have their own specific timelines that may be shorter. Do not assume you have two years. Contact us as soon as a dispute arises to confirm the applicable limitation period for your specific claim.
Can I sue my real estate agent for negligence in Ontario?
Yes, in appropriate circumstances. Real estate agents owe a duty of care to their clients and can be held liable in negligence for failures that cause financial harm — including failure to disclose material facts, negligent pricing advice, failing to communicate offers, or acting in a conflict of interest. A successful negligence claim requires establishing that the agent owed a duty of care, breached that duty, and that the breach caused your loss. These claims can also be combined with a regulatory complaint before RECO or TRREB.
What are my rights as a new home buyer under Tarion in Ontario?
New home buyers in Ontario are protected by the Ontario New Home Warranties Plan Act, administered by Tarion. Protections include deposit insurance of up to $100,000 for freehold homes and up to $20,000 per unit for condominiums, delayed closing compensation where the builder fails to close on time, and warranty coverage for construction defects at one year, two years, and seven years after possession. If a builder fails to honour these obligations, Tarion provides a claims process — and in some cases, litigation may be necessary to enforce your rights.
The Property Counsel Standard
“When a deal goes wrong, what you need first is clarity — what your options are, what they cost, and what to do today.”
Real estate law, only
We litigate exclusively in real estate — our knowledge of the law and the market is focused and current.
We act quickly
Real estate disputes are time-sensitive. We move without delay to protect your legal position from day one.
Direct access to your lawyer
Your file is handled by a licensed lawyer from start to finish — not a paralegal or junior clerk.
Transparent on cost
We discuss fees before we start. You know what you are committing to before the work begins.
Dealing with a real estate dispute?
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Disclaimer: The content on this page is for general information purposes only and does not constitute legal advice. Reading this page does not create a lawyer-client relationship. For advice specific to your situation, contact Property Counsel or your own legal counsel. Property Counsel makes no representations as to the accuracy, completeness, or currency of the information provided. Content reflects the law as of its publication date and may not reflect subsequent legal developments.