Real Estate

Can an accepted offer be rescinded?

  • Last Updated:
  • Sep 21st, 2020 11:34 am
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Jan 2, 2012
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bobbings wrote: Each case is different for sure. If the buyers back out and if you think the value is going to drop due to the market being bad, you'd list it asap and sell it to see what the variance is from the first buyer's purchase price. From there, you can gauge if it's really worth the time and effort to sue and fight for the difference.

$100K sounds excessive but that's just the case that was posted here. I have no experience going through something similar so nothing to base it off of personally.

In a seller's market right now in the GTA, it might even benefit the sellers to relist because the values may have gone up slightly from when it was initially sold.
Even in a rising market meaning the sellers could get more for the home if they re-list, if the buyers were in breach of the contract then the sellers would still be entitled to keep the deposit as no actual damages/losses are required.

Of course to to actually sue for just the deposit amount, is probably not worth it in most cases. Only if there was a smoking gun where sellers had proof the buyers acted in bad faith on one of their conditions.

Also I believe when suing someone you can include your legal fees in the amount, but of course will only get if you win.
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automorphism wrote: The buyer has not yet sent the deposit. What happens if they don't?
Deal is binding upon offer being accepted/signed by both parties. If offer is accepted with requirement of a deposit being received by X date/time, then if buyer doesn't deliver the deposit they are in breach of contract and seller could simply cancel the deal and move on, or sue them for damages if you sell for less.

You may be able to even sue for the unpaid deposit, as a debt owing to you: https://www.canlii.org/en/bc/bcca/doc/2 ... cca17.html
[46] There is authority in this province for the proposition that a claim relating to an unpaid deposit is a claim for debt: see e.g., Busnex Business Exchange Ltd. v. Canadian Medical Legacy Corp., 1999 BCCA 78 at para. 15, where an unpaid portion of a deposit was a claim in debt, and Vanvic, aff’g [1982] 5 WR 530, where this court upheld an award by the trial judge, who found that an unpaid deposit was a debt owing upon acceptance of the offer.
[47] Finally, in my view, none of the principles to which I have referred, in particular those in Vanvic, was overturned by this court in Tang. In Tang, this court held that a deposit is forfeitable regardless of whether the other party suffered any damages, and in doing so, reversed Agosti v. Winter, 2009 BCCA 490. Accordingly, in my view, the principle set out in Vanvic that a party may sue another for the amount of an unpaid deposit owing under a contract when it accepted the other party’s repudiation remains the law in this province.
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Jul 16, 2020
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Its a contract. so that means if the house is being sold later is $100,000 less than what it is sold earlier, the initial buyer is liable for the $100,000?

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Onlyuo wrote: Its a contract. so that means if the house is being sold later is $100,000 less than what it is sold earlier, the initial buyer is liable for the $100,000?
Yes, assuming the buyer breached the contract in bad faith. Plus would owe other expenses/damages the seller had on top of just the price difference.

Even if the home is later sold for $100,000 more than what it was sold earlier, the seller is still entitled to the full amount of the deposit from the buyer.
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Jul 3, 2011
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trebmember wrote:
Done 'at the buyer's expense' just means that the buyer is paying for the home inspection. If the buyer's agent is inexperienced in that he/she didn't use that clause or something very close to it with - 'sole and absolute discretion' and 'This condition is included for the benefit of the Buyer' then the buyer's agent didn't fully protect their client. There was a lawsuit Marshall v. Bernard Place Corporation where the buyer did the inspection but only found very very minor issues but decided to walk away. Naturally the seller sued...but lost because of those two sentences.

I should add that the four year legal battle cost the seller over 100k because of principle
Well, not really, the buyer won because of precisely what rob444 mentioned in all of his posts. Good faith does not allow for a completely subjective determination (such as where furcon rightly points out would be the case in his paint blemish post). Additionally, they exercised good faith in the coming to their decision to back out. The court rulings on the case made it clear, that that factor is what allowed them to back out in that it was not done capriciously or for no valid reason. In this case it wasn't that they used the minor deficiencies to back out, it was that they used the entire objective analysis of the inspection report to determine that raised factors about uncertainties and disruptions is what determined they did not wish to proceed.

deal_with_singh wrote: "to be found satisfactory: a home inspection"
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Your buyer pretty much has an out as long as he gets the inspection done, he doesn't have to share the report with you just has to say he didn't find it satisfactory.

No need to overthink this, you'll be better off just letting him walk and relist like others mentioned. It's an "Easy out clause".
See above. It is an escape clause but such advice to let them walk and relist should never be a blanket response or by anyone who is not aware of the nuances of the ageement.
BearBullBear wrote: I don't think it has to be a professional inspection. If buyer says they don’t like the outcome of the inspection there isn’t much you can do. It can be a little chip on the door but it’s what it is...
It has to be by someone qualified to do the inspection.
rob444 wrote: Deal is binding upon offer being accepted/signed by both parties. If offer is accepted with requirement of a deposit being received by X date/time, then if buyer doesn't deliver the deposit they are in breach of contract and seller could simply cancel the deal and move on, or sue them for damages if you sell for less.

You may be able to even sue for the unpaid deposit, as a debt owing to you: https://www.canlii.org/en/bc/bcca/doc/2 ... cca17.html
[46] There is authority in this province for the proposition that a claim relating to an unpaid deposit is a claim for debt: see e.g., Busnex Business Exchange Ltd. v. Canadian Medical Legacy Corp., 1999 BCCA 78 at para. 15, where an unpaid portion of a deposit was a claim in debt, and Vanvic, aff’g [1982] 5 WR 530, where this court upheld an award by the trial judge, who found that an unpaid deposit was a debt owing upon acceptance of the offer.
[47] Finally, in my view, none of the principles to which I have referred, in particular those in Vanvic, was overturned by this court in Tang. In Tang, this court held that a deposit is forfeitable regardless of whether the other party suffered any damages, and in doing so, reversed Agosti v. Winter, 2009 BCCA 490. Accordingly, in my view, the principle set out in Vanvic that a party may sue another for the amount of an unpaid deposit owing under a contract when it accepted the other party’s repudiation remains the law in this province.
thumbs up for your posts here. They're the ones that should be read for the answer to the OP.
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licenced wrote: Well, not really, the buyer won because of precisely what rob444 mentioned in all of his posts. Good faith does not allow for a completely subjective determination (such as where furcon rightly points out would be the case in his paint blemish post). Additionally, they exercised good faith in the coming to their decision to back out. The court rulings on the case made it clear, that that factor is what allowed them to back out in that it was not done capriciously or for no valid reason. In this case it wasn't that they used the minor deficiencies to back out, it was that they used the entire objective analysis of the inspection report to determine that raised factors about uncertainties and disruptions is what determined they did not wish to proceed.
For those that want more insight into this case - the buyers did their due diligence and went through all the things one does when they are seriously considering a home purchase.

"The respondents inspected the Bernard Property on two occasions prior to entering into the Agreement. They were considering two renovations to the house, should they acquire it: creation of a rooftop garden area, which would require a feasible water source on the rooftop, and the re-design of existing garden patio doors. No mention of either renovation was made in the Agreement, either as a condition or as part of the work scheduled to be done by BPC prior to closing, the latter as detailed in Schedule “A” to the Agreement."

They did not back out subjectively but had very valid reasons not to go through with the purchase because their intention was to build a rooftop garden. The use of 'sole and absolute discretion' was very instrumental to their case. We won't know how the appeals' judges would have ruled if that was not included but in the ruling it was noted 'The clear language of the inspection condition did not provide for the participation by BPC, as vendor, in the inspection of the property or in the decision whether the inspection report was satisfactory, nor did it confer a right on BPC to remedy any deficiencies identified in the inspection report to avoid reliance by the purchaser on the inspection condition. Had the parties envisaged such rights for the vendor, or its agent, the language of the condition should have so stated.'

So yes, you cannot act unreasonably or not in good faith (having a home inspected by an unqualified person, or none at all), but there should be clear language in any condition.
Last edited by trebmember on Sep 20th, 2020 6:48 pm, edited 1 time in total.
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[OP]
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trebmember wrote: Second what Furcon has stated, and if the buyer doesn't intend on going through with the purchase by not submitting the deposit your agent should still get a mutual release signed by both parties
There is a certain deadline date set for the deposit to be received, the deposit amount is 5k. How much would a lawsuit cost to recover the deposit? I think the Small Claims Court would be the institution to refer to in this case, and it could be well under 5k in legal costs, especially without a lawyer. I think small claims aren't that sophisticated.
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automorphism wrote: There is a certain deadline date set for the deposit to be received, the deposit amount is 5k. How much would a lawsuit cost to recover the deposit? I think the Small Claims Court would be the institution to refer to in this case, and it could be well under 5k in legal costs, especially without a lawyer. I think small claims aren't that sophisticated.
First and foremost, you would need to talk to a lawyer experienced in real estate matters before deciding to do anything.

If you did proceed to sue, it would be for breach of contract due to buyer not paying deposit by the agreed upon time. This means you would be entitled to not just the deposit, but any price difference between the buyers offer price and any new price you got in the future, plus other damages/losses. So you would probably want to wait until home is re-sold and you confirm if any further amounts would need to be added to lawsuit above and beyond the deposit amount. If you're going to sue, you may as well make it more worthwhile and go after a bigger amount. Again though, you need to talk to a lawyer first.
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This is why it is an advantageous situation for the seller to do a house inspection and increase their price by the cost.

It is unreasonable, IMO, for anybody to buy a house with no home inspection - it's just a recipe for heartache. That being said, putting a clause in for home inspection gives the buyers a cold feet clause, as mentioned in the thread. So, go out and get one on your own, and tack on $500 or so to the cost of the house, and don't allow that clause. If you want to validate the house's condition, here - read this.
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Can an offer ever be rescinded after the buyer accepted the offer and being firm (after the home inspection and financing has been done) ?
example: seller wants to back out a week before the closing date.
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Feb 19, 2019
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kwanman wrote: Can an offer ever be rescinded after the buyer accepted the offer and being firm (after the home inspection and financing has been done) ?
example: seller wants to back out a week before the closing date.
No, this is clearly a breach of contract.
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kwanman wrote: Can an offer ever be rescinded after the buyer accepted the offer and being firm (after the home inspection and financing has been done) ?
example: seller wants to back out a week before the closing date.
It is rare the "seller" rescinds, usually, it's the buyer. Technically, yes, anyone can rescind. There will be legal ramifications though and could be quite $$$.
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automorphism wrote: A buyer has sent an offer to buy a house, and it was accepted. The offer doesn't have a financing condition, but it has an inspection condition. Is there a possibility that the buyer can rescind his offer even before an inspection will be done? And if the inspection is done and nothing significantly 'bad' is found, can he still rescind the accepted offer? Thanks.
to simply answer your question, it depends how the clause was written in your offer. If "satisfactory to Buyer" is mentioned, then the buyer can back out relatively easily. Depending on your negotiation position, an inspection clause should have a short timeframe to fulfill.
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Oct 7, 2007
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I remember putting an offer as one of multiples a few years back and when we asked the realtor who "won" the house, the realtor informed us that the seller decided to pull their listing off of the market.
I was shocked that they did that and was wondering if the sellers were thinking that they had underpriced their house and had seller's remorse.

On the flip side, I was wondering if they could legally do that, but realtors are not super helpful when it comes to the legality of stuff to do with real estate so we just left it and moved on.
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choclover wrote: I remember putting an offer as one of multiples a few years back and when we asked the realtor who "won" the house, the realtor informed us that the seller decided to pull their listing off of the market.
I was shocked that they did that and was wondering if the sellers were thinking that they had underpriced their house and had seller's remorse.

On the flip side, I was wondering if they could legally do that, but realtors are not super helpful when it comes to the legality of stuff to do with real estate so we just left it and moved on.
Pulling the listing off the market happens more often than you think, and it is legal (ie. not rescinding). Typically, sellers may be promised or expect a certain sale price. The house goes on the market, after some time, no offers meet the seller's expectation, so it comes off the market. A few sellers I've worked with are under the wrong impression that if a buyer gives a firm offer at the listing price, the seller must sell, which is not the case.

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