Can you just walk from a deal?

 

When the real estate market is good, Sellers always ask if they can get out of the contract and find another Buyer.

Similarly, now that the market has cooled a little bit, Buyers ask if they can somehow get out of the deal because the property isn’t worth as much as it used to be!

 

First off, a firm deal is a firm deal.  It means that the Buyer promised a certain amount of money on the closing date, and the Seller promised clear title to the property as well as vacant possession. (More on that next week with my interview, “Buying a Tenanted Property!”)
 

In the article below, the judge ruled that the Seller didn’t “mispresent” the value of their property, nor was it their responsibility to ensure that the Buyer could actually afford the house.

 

This is especially problematic if the appraised value drops or maybe your job-situation changes and the bank doesn’t give you as much money.

This is similar to 2017 when Toronto detached homes dropped by like $400k and everyone was trying to get out of deals.  Recently, I’ve heard of many Buyers who are trying to renege on their contracts.

 

If you want to pursue that avenue, I recommend that you consult with a lawyer. 

The (bad) advice out there is “you can just surrender your deposit and that’s all you will lose.” For your information, this is incorrect as the deposit is the “minimum” you can lose. 

Your substantive losses will be the difference from your sales-price and whatever the market is selling at now.  For example, if you offered to buy the house for $2,000,000.  And now they were only able to sell it for $1,800,000, then they could sue you for the difference.

So before you do anything rash, please consult with a professional.