Nick Answers Reddit
What happens if a seller doesn’t close on time in Ontario?
If the PSA is signed by both the seller and buyer and the deal is done , closing is pending ( awaiting TT eviction) can the seller backout before closing by giving any legal reason ? ( because he may assume that with falling interest rates seller might get a better price for the sale if he list it again in up summer market )
Nick’s Clarification of OP’s Post:
What happens if the seller doesn’t close on time in Ontario? I’m buying a property, but I’m wondering what would happen if, for some reason, the Seller couldn’t vacate the home by the closing date. Could the I take legal action? Would they owe me compensation?
Nick Answers Reddit
Every week, Nick answers a Redditor’s question about buying, selling, renting, investing, or living in Ottawa. Send Nick your own questions on the website, on Reddit, or in a YouTube comment!
Nick’s Response
This is an important question, especially in Ontario where tenant protections are strong. If the seller hasn’t taken the necessary legal steps to ensure the property is vacant by closing, it can cause significant delays—or even legal trouble.
1. Seller’s Responsibility to Provide Vacant Possession
If your purchase agreement states that the property will be delivered vacant, it’s the seller’s responsibility to ensure that happens. In Ontario, this means:
Proper Notice to Tenants: The seller must give tenants at least 60 days’ written notice using the appropriate form (N12 for buyer’s personal use, for example). Importantly, this notice can only be given after all conditions in the sale are fulfilled (i.e., once the deal is firm).
Compensation to Tenants: If the seller is evicting a tenant for buyer’s personal use, they must also compensate the tenant with one month’s rent or offer another acceptable unit.
If the seller hasn’t followed these legal steps, they may not be able to deliver the property vacant on the closing date.
2. What You Can Do as the Buyer
If the seller can’t close because tenants are still in the property, you have several options:
Negotiate a Closing Extension: You can agree to delay the closing to give the seller time to properly serve notice and vacate the property. However, you may want to negotiate compensation for your inconvenience, such as covering temporary housing or storage costs.
Force the Seller to Close or Face Legal Consequences: If the seller is in breach of contract, you can:
- Sue for Damages: If the delay costs you money (e.g., storage, temporary accommodations, or lost rental income if you’re an investor), you can pursue compensation through legal channels.
- Demand Specific Performance: This is a legal action where a judge can force the seller to fulfill the contract terms. However, this process can be time-consuming and costly.
Walk Away from the Deal (if Contract Allows): Depending on the wording of your contract, you may have the option to walk away if the seller can’t deliver vacant possession. In some cases, you may be entitled to a refund of your deposit.
3. How to Protect Yourself Before Closing
To avoid these issues, here are some steps you can take during the buying process:
Include a Clause in the Purchase Agreement: Ensure your contract explicitly states that the property will be delivered vacant and that the seller is responsible for serving proper notice to tenants.
Request Proof of Notice to Tenants: Before closing, ask for written proof that the tenants have been served the correct notice and that compensation (if required) has been provided.
Work with a Real Estate Lawyer: A lawyer can review the purchase agreement and ensure that your interests are protected if the seller isn’t prepared to close.
609
120