I’m Interested in Purchasing My First Property. What Are Some of The Common Reasons Real Estate Deals Fall Through? Posted onSeptember 27, 2019June 25, 2023/ Devry Smith Frank LLP The process of buying your first home can be both an exciting and overwhelming experience. Often, it is the largest investment a person will make in their lifetime and a transaction that can come with a lot of legal and financial risk. With that being said, with good communication, meticulousness and compliance with the process, a real estate deal should proceed without any drawbacks along the way. Nevertheless, it is best to be prepared for the worst-case scenario should it transpire. Many buyers and sellers may be taken aback when they learn a transaction falls through between signing the Agreement of Purchase and Sale and the closing date. Here are some of the possible reasons why: HOME INSPECTION CONCERN ARISES Obtaining a home inspection from a reputable company is a must-do during the home buying process. If the existing survey is outdated and/or you plan to make some major changes to the home, hiring a qualified surveyor to complete an updated survey is recommended. Unexpected discoveries about the condition of the property can impact the sale or rather the non-sale of the property in question. The best-case scenario is the buyer is able to negotiate a discount off the price, and worst-case scenario, the buyer withdraws their initial offer completely if the offer was conditional upon a home inspection. THE BUYER UNEXPECTEDLY CANNOT SECURE FINANCING A pre-approval from the bank does not always guarantee financing. This situation can go one of two ways. At best, there will be a delay or extension of the closing date until finance is secured. Alternatively, and maybe the most straightforward remedy, is the seller to accept the breach of contract, terminate the agreement and keeps the deposit. As the seller, you then have the benefit of walking away and selling to another buyer. THE BUYER CHANGES THEIR MIND It is common to have second thoughts when purchasing what you thought was your dream home. However, once an Agreement of Purchase of Sale has been signed with no conditions, the situation can get complicated. Check your Agreement – for pre-construction condominiums, often there is a 10 day “cooling off period” clause where buyers can walk away from the deal within that time period. In other circumstances, you are legally bound to follow through with the transaction or be subject to a penalty. If you are a buyer or a seller in the sale of a property in Ontario and have questions regarding the transaction, contact real estate lawyer Jennifer Hetherington a 416-446-5838 or jennifer.hetherington@devrylaw.ca “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” Related Posts Posted onAugust 2, 2019September 30, 2020/ Christopher W. Statham What happens when a party to a real estate transaction fails to close? The Agreement of Purchase and Sale (APS) has been signed and any conditions waived or fulfilled. All that remains is for the closing itself to take place. What happens when a party to a firm APS fails to close the deal? This may happen, for example, if the buyers find out that they are unable [...] Read more Posted onJuly 9, 2019September 30, 2020/ Devry Smith Frank LLP The House I Recently Purchased Was Used to Manufacture Illegal Substances: What Now? You’ve just signed an agreement of purchase and sale, and you’ve discovered that drugs were illegally manufactured on the property years before the seller bought it. Can you get your deposit back? A recent Ontario Court of Appeal decision dealing with an “Illegal Substances Clause” in an Agreement of Purchase and Sale (“APS”) says: ‘it [...] Read more Posted onJuly 2, 2019July 5, 2023/ Devry Smith Frank LLP Does every home purchase and sale in Ontario require a lawyer? Parties to a real estate Agreement of Purchase and Sale occasionally ask whether they actually need a lawyer to close the deal. The answer to that question is a resounding yes. Historically, closing a real estate transaction in Ontario would involve lawyers attending at a Land Registry Office (LRO) to conduct title searches. On the [...] Read more