As a seller, the excitement of receiving a firm offer on your property often marks the high point of the sale process. However, what happens when that firm offer falls through? Imagine a scenario where a buyer, seemingly committed, fails to secure financing or simply cannot close the deal. The implications are serious: in most cases, the buyer not only forfeits their deposit but may also face legal consequences for breaching the contract.
The Reality of Firm Offers
In real estate, a firm offer means that the buyer has agreed to purchase the property without any conditions, such as financing or inspection. This type of offer often appeals to sellers, as it suggests a quicker, more assured path to closing. But if the deal collapses, sellers can be left in a difficult situation. A buyer who cannot close on a firm offer is typically at risk of losing their deposit, which is the seller’s compensation for the failed transaction. Moreover, sellers have the right to take legal action to seek additional damages if they’ve suffered financial loss due to the deal’s collapse.
The Legal Process and Keeping the Deposit
If the deal fails without conditions to shield the buyer, the seller can claim the deposit and, if necessary, initiate legal action. Courts in Ontario have generally upheld the right of sellers to retain the deposit in such cases, though the process can be complex and emotionally taxing.
A Story From Experience
I recently assisted a client in a similar scenario. The buyer backed out just days before closing, unable to secure financing despite their firm offer. As the sellers, my clients not only retained the deposit but also successfully took the buyer to court for additional damages. This unfortunate situation underscored the importance of firm commitments in real estate – and how essential it is for sellers to be well-informed about their rights.