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!

What happens when a closing date passes and neither side shows up ready to close? Does the deal survive? Can either party still enforce it?

And if the deal eventually dies, who gets the deposit?

That's the question in Nieuwenhuis v. FRP Inc., where a $3-million property sale collapsed after both sides failed to tender on closing day. The sellers waited nearly three years, sold the property for less than half the original price, and then sued for $1.7 million in damages. The court said no. The deal had quietly died. And the buyer got the deposit back.

The Case: A $3-Million Sale That Nobody Closed

August 2017. Bertus and Diane Nieuwenhuis signed an Agreement of Purchase and Sale to sell their Bowmanville property to FRP Inc. for $3,000,000. Deposit: $175,000. Closing date: September 29, 2017.

The APS had two conditions. A solicitor approval condition for the sellers. And a lease condition requiring the parties to sign a residential lease allowing the Nieuwenhuis family to remain on the property for two years after closing.

The approval condition was never formally satisfied or waived. No lease was ever prepared.

By September 17, the parties agreed to extend closing to October 6, 2017. The sellers told FRP they had purchased another property in Bancroft and needed the sale proceeds to close that deal. FRP's representative, Harvey Ambrose, assured them they wouldn't be "out of pocket."

October 6 arrived. Neither party was ready. The sellers hadn't prepared a deed. FRP didn't have financing. No lease existed. Neither party tendered.

After October 6, discussions continued. Extensions to October 13 and 16 were mentioned but never signed. A second APS was drafted in September 2018 at a reduced $2,300,000 price. It was never executed either.

In September 2020, the sellers finally sold the property to a third party for $1,300,000. They sued FRP for $1.7 million in damages. FRP counterclaimed for the return of its deposit.

The Court Showdown: Who Killed the Deal?

The sellers argued:

• FRP breached the APS by failing to close on October 6, 2017.

• FRP couldn't arrange financing. That's not the sellers' problem.

• The APS was not conditional on financing.

• FRP owes damages for the difference between the contract price and the resale price.

FRP argued:

• Neither party was ready to close. Neither tendered.

• Two conditions were never satisfied or waived. The lease condition was never fulfilled.

• Neither party ever gave notice reinstating time of the essence and setting a new closing date.

• The deal died by mutual abandonment. The deposit should be returned.

The Decision: Agreement Abandoned, Buyer Gets Deposit Back

Justice Taylor sided with FRP.

The court found that neither party did what was needed to keep the deal alive.

• The approval condition was implicitly waived. When the parties extended the closing date on September 17, they did so well after the three-banking-day approval window had passed. Extending a "null and void" agreement makes no sense. The sellers' conduct showed they considered the deal alive.

• The lease condition was never satisfied. No lease was ever drafted or signed. This condition mattered to both parties.

• Neither party tendered on October 6. The sellers hadn't prepared a deed. FRP didn't have funds. Neither side was ready, willing, and able to close.

• Neither party reinstated time of the essence. Discussions continued, but nobody served formal notice with a new closing date. The sellers eventually just sold to someone else.

Following King v. Urban & Country Transport Ltd. and Malka v. Racz, the court held that where both parties let the closing date pass without tendering, and neither reinstates time of the essence, the agreement is treated as abandoned. The deposit returns to the buyer.

The sellers' $1.7 million damages claim was dismissed. FRP got its $175,000 deposit back, plus interest.

Key Takeaways (Without the Legalese)

1/ When neither party tenders, nobody wins.

Both sides arrived at October 6 unprepared. No deed. No funds. No lease. Neither party tendered. Neither could later claim the moral high ground.

Lesson: If your client wants to enforce a deal, they must tender on closing day. Even if they know the other side won't be ready. Even if it feels futile. Tendering preserves their rights. Skipping it creates mutual default.

2/ A missed closing date doesn't automatically kill the deal. But letting it drift will.

The APS didn't end on October 6. It entered a twilight zone. Either party could have revived it by serving notice with a new reasonable closing date. Neither did. Years passed. The deal died.

Lesson: If a closing date passes without completion, act quickly. Advise your client to either serve notice reinstating time of the essence or get clear legal advice on next steps. Doing nothing is a strategy for losing.

3/ Conditions matter. Even forgotten ones.

The lease condition was never satisfied. No lease was ever drafted. The court found this condition important to both parties. The sellers couldn't treat the deal as enforceable while ignoring an unfulfilled condition they had agreed to.

Lesson: Before chasing a defaulting party, review the APS. Are all conditions satisfied or waived? Unfulfilled conditions can undercut a damages claim.

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