Imagine securing your client's dream century home, only to watch the deal go up in flames. What happens next?

Consider the recent case of McDonald v. Lowrie (2025 ONSC 1397), where an Ontario buyer’s dream of restoring a historic century home went up in flames - quite literally. A buyer entered into a firm agreement to purchase a historic century home near Tillsonburg, Ontario. Set on two acres, the charming property was priced at $775,000, secured by a $25,000 deposit. Unfortunately, before closing could occur, a catastrophic fire destroyed the house completely.

Faced with this substantial loss, the buyer invoked the standard OREA insurance clause, which clearly states the buyer has two choices: terminate the transaction and reclaim the deposit, or continue the purchase and accept whatever insurance proceeds become available.

The buyer still wanted the property - but, insisted the seller guarantee a minimum amount of insurance proceeds. The seller refused, claiming the buyer repudiated (backed out of) the agreement. The buyer argued the seller breached by failing to guarantee the insurance proceeds and by unreasonably refusing a longer extension. The case ended up in the Superior Court.

Key Takeaways (without the legalese)

(1) Time is of the Essence means exactly that.

The buyer wanted multiple extensions to confirm insurance payouts. The seller agreed twice—but when the buyer demanded a guarantee beyond what was written in the agreement, the seller refused another extension. The court held that the seller was entitled to stick to the deadlines because the buyer’s demand for a guarantee wasn’t part of the original deal.

Lesson: Courts respect deadlines. Extensions are courtesies, not rights

(2) Insurance proceeds: You get what you get.

The standard OREA form states that if a property is significantly damaged before closing, the buyer has two choices:

• Cancel and get their deposit back.

• Complete the purchase and take whatever insurance proceeds are payable.

The buyer tried to add a third option: guarantee the minimum insurance amount. The court said no - the OREA clause doesn't promise specific insurance funds, just the right to whatever proceeds become payable.

Lesson: The contract terms matter. The court won't rewrite them to suit either party.

(3) Deposits aren’t easily recovered.

Because the buyer tried to impose new terms, the seller successfully claimed the buyer repudiated the contract, allowing them to retain the $25,000 deposit. The court found no exceptional circumstances warranting a refund.

Lesson: Changing contract terms late in the game is risky. Deposits can—and often will—be forfeited.

Precision protects clients. Ambiguity invites trouble.

Questions or advice needed on your next closing? Reach out at [email protected] or call 519-997-3775.

Solid contracts ensure seamless closings.

Until next time - keep your contracts sharp and your closings smoother.

-Christian