In real estate, even a minor change can undo what looks like a firm deal. In the recent Ontario decision of Ali et. al. v. Patel et. al., released on June 24, 2024, the sellers lost out on $50,000 and had to resell their property at a loss - all because of a small procedural detail that unraveled a seemingly firm agreement.

The Offer That Fell Apart

The buyers submitted a firm, no-conditions offer on the property, agreeing on price, deposit, and a closing date. The sellers were eager to accept. However, they returned the signed agreement with one small change: the inclusion of Schedule B, a standard addendum used due to COVID to address logistical issues like banking delays or office closures. The sellers viewed this as a simple, non-material addition - after all, the MLS listing had stated that Schedule B was required.

But that small change opened the door for the buyers to back out.

Overnight, the buyers reconsidered the purchase. By the next morning, citing personal reasons, they withdrew from the deal. Since Schedule B was added after the initial offer, it created a new counteroffer, allowing the buyers to argue that no binding contract had been formed.

The Loophole that Cost $50,000

From the sellers’ perspective, the deal was done. They had agreed to the key terms and viewed Schedule B as merely formalizing what had already been referenced in the MLS listing. But in contract law, any change to an offer, even a minor one, creates a counteroffer that both parties must agree to. 

The court sided with the buyers, ruling that no binding contract had been formed because the buyers had not signed the revised agreement with Schedule B, leaving the sellers without their $50,000 deposit and forced to sell the property at a $25,000 loss.

Why This Matters to You

This case offers a broader lesson for real estate professionals: even the smallest procedural or technical detail can have a significant impact on a transaction. In this instance, while Schedule B didn’t alter the core terms of the agreement, the sellers’ decision to add it with their “acceptance” of the offer opened a legal loophole, allowing the buyers to walk away.

In hindsight, a more strategic approach might have been to accept the offer as-is to lock in a firm agreement and then address the minor logistical details through an amendment afterward. This would have secured the deal first and avoided the procedural pitfall that ultimately cost the sellers both time and money.

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If you have questions about your agreements or need assistance with your real estate transactions, we’re here to help. Reach out to us at [email protected] or 519-997-3775. Let's ensure your next deal is as solid as the contract that binds it.