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 part-time realtor signs a lucrative assignment, knowing the builder’s contract forbids reselling without paying for assignment rights or getting written consent, and knowingly skips both steps?

That’s what unfolded in Dhonsi v. Parkvillegreens Belleville Inc., where a Belleville realtor locked in a $510,000 assignment on a $399,900 pre-construction unit without paying the $5,000 fee or asking for approval. Months later, the builder found out, killed the deal, and kept his $37,500 deposit.

The Case

In November 2020, Dhonsi (a part-time realtor) signed an Agreement of Purchase and Sale for an unbuilt “Banff” model townhome at $399,900. Over the next seven months, he paid $37,500 in deposits.

Three key parts of the APS mattered here:

• Clause 10: Any breach lets the builder cancel the deal and keep your deposit.

• Clause 11: You can’t resell or assign without written consent. The builder can refuse for any reason.

• Schedule X: Assignment rights are available at an extra cost of $5,000 + legal fees + HST.

Dhonsi never notified the builder of his intention or desire to assign the townhome, nor did he purchase the assignment rights.

Still, by April 2021, Dhonsi’s agent had listed the unit for assignment on social media. Six months later, in October 2021, he signed a formal assignment agreement for $510,000, knowing the builder’s written approval was required but choosing not to ask for it.

In December 2021, the builder ultimately learned of the assignment. As a result, on January 7, 2022, their lawyer notified Dhonsi’s lawyer of the breach, advised that the APS was terminated, and confirmed the $37,500 deposit was forfeited.

The Court Showdown: Misunderstanding or Clear Breach?

Dhonsi argued:

• He thought Schedule X meant consent was already granted.

• This was a “non-financial” breach, and the builder is able to sell the property at a profit, so forfeiting the deposit was unfair.

• The builder acted in bad faith.

The builder argued:

• Schedule X was only an option. You pay the $5,000, then get consent.

• Clauses 10 and 11 were clear: no consent = no assignment.

• Listing and signing the deal without paying or asking for permission was a clear breach.

The Decision: Builder Wins - No Consent, No Deal

The judge agreed with the builder:

• Dhonsi didn’t pay the $5,000 or get approval, so Schedule X gave him nothing.

• Both clauses 10 and 11 were broken.

• The deposit was under 10% of the price, so it wasn’t excessive.

• Even if the builder could sell for more, that doesn’t make keeping the deposit unfair.

Result: Dhonsi lost the $37,500 deposit and had to pay $17,500 in the builder’s legal costs.

Key Takeaways (Without the Legalese)

1/ Realtors face higher scrutiny.

The court refused to call this unfair because Dhonsi was an experienced realtor with representation. Knowledge of the business means less sympathy in court.

Lesson: Industry pros are expected to know and follow the fine print. “I didn’t realize” won’t work.

2/ Builder profit doesn’t erase your loss.

Even if the builder resells for more, a reasonable deposit isn’t “unconscionable” and can still be kept.

Lesson: Courts rarely overturn deposit forfeitures under 10%, even in a hot market.

3/ Understand your contract.

Lesson: Read the APS front to back. If you plan to assign, know exactly what the contract requires and follow it to the letter (particularly important with lengthy new build contracts).

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