Real Estate Law. Real-World Lessons.

Every week, Ontario courts deliver decisions that reshape how real estate deals play out - impacting your closings, commissions, and client relationships. But who has time to sift through 50+ pages of legalese?

We do.

Clause & Effect breaks down Ontario’s biggest real estate cases into clear, practical takeaways for realtors, mortgage advisors, and investors. No fluff. No Latin. Just sharp lessons you can actually use.

Let’s dive in!

Imagine this: your buyers go firm, waive an inspection condition, and then at the final walkthrough find water pooling in the basement. They panic. They say, “We’re out.”

That’s exactly what happened in the recent decision of Coppendale v. Mills (2025 ONSC 5192). The buyers thought a “detrimental condition” warranty in the APS gave them a free exit. The sellers said the warranty only applied to what they knew when the deal was signed. The judge had to decide: does that survival clause protect buyers at closing, or only lock in the sellers’ knowledge on the day they signed the APS?

The Case

In May 2023, the sellers listed their Hamilton home at $1,089,000. Two days later, buyers offered $1,075,000 firm, with a $20,000 deposit and July 24 closing. They deleted the inspection condition but kept the right to three (3) pre-closing visits.

On the third visit, July 2, during heavy rain, the buyers and their engineer saw ½–1 inch of water pooling in the cold cellar. Alarmed, they refused to close.

The sellers relisted. By February 2024, they sold for $915,000 (over $160,000 less). They sued for $206,703.56 in losses and asked to keep the deposit.

At the heart was this clause from Schedule A of the APS:

The Court Showdown

The buyers argued:

• The survival sentence meant the warranty spoke as of closing, not just at the time of signing the APS

• By July 2 (after the APS was signed, but before closing), the sellers knew water was an issue, so they breached the warranty clause

• They asked for rescission and return of the $20K deposit

The sellers argued:

• The warranty only spoke to their knowledge at signing

• They had no knowledge of water problems on May 13 when the APS was signed

• Occasional dampness in a 1950s cold cellar isn’t a “detrimental condition”

• The sellers’ engineer testified explained 1950s homes often lacked exterior waterproofing; a damp cellar was typical, not defective; there was no sign of leakage; and the buyers’ photos didn’t show actual pooling

The Decision: Seller Wins

Justice Conlan sided with the sellers.

• Warranty Fixed at Signing: The court ruled the “detrimental condition” warranty only spoke to the sellers’ knowledge when they signed the APS, not what they learned later. “Survives closing” preserved the right to sue after closing, but didn’t extend the warranty date to closing.

• “Circumstances existing at or before closing” ≠ new promise: That phrase was read as a limit, not an expansion. It meant the sellers couldn’t be sued for things that happened after closing, not that buyers could reassess the property before closing.

• No Detrimental Condition Proven: The buyers’ evidence was weak. The sellers’ expert explained dampness in a 1950s cold cellar was common and not necessarily defective. The judge found no proof of actual pooling or value impact.

Result: The buyers breached. The sellers kept the $20,000 deposit, and the buyers were ordered to pay $206,703.56 in damages for the resale loss.

Key Takeaways (Without the Legalese)

1/ “Survives closing” ≠ “at closing.”

Lesson: Unless a warranty explicitly says it applies “on completion,” courts treat it as fixed at signing. If buyers want seller promises to apply right up to closing, the clause must explicitly say “as of closing.”

2/ Detrimental condition requires proof, not suspicion

Lesson: Courts need persuasive expert evidence that a condition actually affects value. A wet photo or a nervous contractor won’t cut it.

3/ Walking away can be expensive!

Lesson: Deposit + damages can easily exceed six figures. Here, the buyers’ failed exit cost them over $200K.

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.

-Christian