What happens if the seller backs out of the deal?

What happens if the seller backs out of the
deal?

Seller Backed Out of the Deal? Here’s Exactly What You Can Do in Milton, Ontario — and How to Make Them Pay

Quick answer — what happens when a seller backs out in Milton, ON

If the seller backs out after you have a signed Agreement of Purchase and Sale (APS), they are in breach of contract under Ontario law. You can demand performance, sue for specific performance, recover your deposit, and claim damages. If the seller never signed an APS, they can walk away — but you still may have options if timelines, representations, or multiple-offer processes were mishandled.

This post cuts through the legal jargon and gives Milton buyers and their agents a step-by-step game plan. No theory. No fluff. Real steps you can take now.

The legal framework that matters in Milton, Ontario

• Ontario law governs real estate deals in Milton. Key frameworks and players:
• REBBA (Real Estate and Business Brokers Act, 2002) — governs broker conduct and trust funds.
• RECO (Real Estate Council of Ontario) — enforces conduct standards for Realtors.
• OREA standard Agreement of Purchase and Sale (APS) — the form used in most Ontario residential transactions.
• Courts: Ontario Superior Court of Justice handles major real estate contract disputes; Small Claims Court can handle claims up to its monetary limit.

Knowing these lets you act fast and correctly.

Two scenarios: before acceptance vs. after acceptance

1) Seller backs out before you both sign an APS

• Legally: No binding contract exists until the APS is signed by both buyer and seller (and any required conditions or irrevocable times are met). The seller can accept a better offer or change their mind.
• Practical: If you had a written offer with an irrevocable time and the seller signed within that window, the contract is binding.
• Action: Keep records (emails, texts, MLS notes). Ask your agent for written confirmation of timelines. If you suspect bad faith or multiple-offer mismanagement, you can lodge a complaint with RECO.

2) Seller backs out after an APS is signed

• Legally: This is a breach of contract. Remedies for the buyer include specific performance, damages, and return of deposit.
• Common outcomes in Ontario:
• Buyer sues for specific performance (court orders seller to complete the sale). Courts frequently grant this when the property is unique and damages are inadequate.
• Buyer claims damages (losses from the failed transaction).
• Deposit disputes: deposit is held in trust (brokerage). If seller breaches, buyer typically recovers deposit. If dispute arises, the trust funds can be put into court or dealt with by agreement.

Why specific performance matters in Milton

Real estate is location-specific. Milton is growing fast, and similar properties aren’t always available. Ontario courts often favor specific performance over monetary damages because money can’t always replace a particular home in a tight market.

If you want the property, your strongest legal move is an application for specific performance. If you want out and money, you can demand damages instead.

Immediate steps to take if the seller backs out — do these now

1. Don’t panic. Gather the paper trail.

• Signed APS with dates and signatures.
• Proof of deposit payment (trust receipt from brokerage).
• Written communications (emails, text messages) with seller, listing agent, and buyer’s agent.

1. Contact your real estate lawyer immediately.

• Real estate lawyers in Milton will file the proper notices, preserve evidence, and communicate with the seller’s lawyer.

1. Instruct your broker to freeze the deposit in trust and not release funds.

2. Send a demand letter.

• Your lawyer or agent should send a firm demand for completion or damages. This letter starts the clock and often triggers negotiation.

1. Ask for specific performance or damages — decide what you want.

• If you want the house: seek specific performance.
• If you want out: ask for deposit return and damages.

1. If negotiations fail, prepare to sue in Ontario Superior Court of Justice.

• Your lawyer files a Statement of Claim. Be mindful of the Limitations Act (generally two years for civil claims). Act quickly.

Deposit and trust fund rules — what to expect in Milton

• Deposits are held in trust by the brokerage (per REBBA). If seller breaches, the buyer is usually entitled to the deposit back and possibly damages.
• If the seller’s agent disputes the release of funds, your lawyer can apply to court for relief or for the deposit to be paid into court until resolution.
• Never take the seller’s word over a broker’s trust receipt — get written confirmation from the brokerage or your lawyer.

Common seller excuses and how the law treats them

• “I have a better offer.” If APS signed by both parties: this is not a legal excuse. The seller is in breach.
• “I changed my mind.” Not a legal defence after acceptance.
• “There was a problem with the title.” This depends on conditions in the APS; if title condition not met and properly invoked, seller might be justified. Get legal advice immediately.

Local nuances for Milton, ON buyers

• Market realities: Milton’s market is competitive. Sellers sometimes respond to multiple offers aggressively. If you secured a signed APS, courts understand Milton’s limited inventory and often favor buyers’ requests for specific performance.
• Local professionals: Use a Milton-based real estate lawyer who knows Halton Region Land Registry practices and local court timelines. They know how Milton closings operate and can move faster.
• RECO complaints: If you suspect agent misconduct (misrepresentation, failing to present offers, mishandling deposits), file with RECO. Keep records.

Cost vs. benefit: when to sue and when to walk away

• Specific performance cases involve legal fees, court time, and emotional strain. But in a tight Milton market, the benefit can be far greater than the cost.
• If the purchase price is far higher than alternatives and you have strong grounds, pursue specific performance. If you can buy equivalent property easily or damages would make you whole, settle for money.
• Your lawyer will craft a cost-benefit analysis specific to your deal.

How to prevent seller withdrawal before closing

• Use clear irrevocable times in offers.
• Include firm conditions and deadlines in the APS.
• Require deposit confirmations and have funds ready in trust promptly.
• Work with a Milton realtor who understands multiple-offer protocols and insists on orderly presentation and acceptance records.

Sample timeline after seller withdraws (practical)

• Day 0: Seller refuses to complete. You get written confirmation.
• Day 1–3: Lawyer sends demand letter for performance or damages.
• Day 7–21: Negotiations or mediation attempts.
• Day 21+: If unresolved, Statement of Claim filed in Ontario Superior Court; seek urgent relief if necessary.
• 1–9 months: Court process (can be faster with urgency and limited issues). Specific performance hearing may be scheduled.

What buyers in Milton should keep in mind

• Document everything. Your best weapon is a clean, time-stamped paper trail.
• Immediate legal counsel matters. Don’t wait.
• Understand your objective: property possession (specific performance) or compensation (damages).
• Use local professionals who know Halton Region courts and registries.

Contact for immediate help

If you’re in Milton and facing a seller who’s walked away from a signed deal, get expert advice now. A local Realtor and experienced real estate lawyer will protect your rights and move fast.

For direct, practical help in Milton, ON contact:

Tony Sousa — Milton Realtor, tony@sousasells.ca, 416-477-2620, https://www.sousasells.ca

FAQ — Seller backs out of a deal (Milton, Ontario)

Q: Can a seller back out after signing the Agreement of Purchase and Sale?
A: No. Once both parties sign a legally valid APS in Ontario, the seller cannot simply back out without breaching contract. The buyer can pursue specific performance or damages through the Ontario courts.

Q: What is specific performance and will a Milton court grant it?
A: Specific performance is a court order forcing completion of the sale. Ontario courts often grant it in residential real estate disputes because properties are unique. In Milton’s tight market, courts recognize that money may not adequately compensate buyers.

Q: What happens to my deposit if the seller refuses to close?
A: The deposit is held in trust by the brokerage. If seller breaches, the buyer typically gets the deposit back and may also claim damages. If the broker or seller disputes the release, your lawyer can apply to the court to have funds paid into court or released to the buyer.

Q: How long do I have to sue a seller in Ontario?
A: Under the Limitations Act, 2002, you generally have two years from the date you discovered the breach to start a claim. Don’t wait — act quickly to preserve evidence and options.

Q: Can the seller keep my deposit if they claim misrepresentation?
A: The seller must prove lawful reason to keep the deposit. If the buyer misrepresented or breached the APS, the seller may have remedies. This becomes a legal dispute: get a lawyer.

Q: What if the seller accepted another offer because it was higher?
A: Accepting a higher offer after APS was signed is a breach. You can sue. If the APS was not signed or an irrevocable time had not lapsed, the seller may not be bound.

Q: Who enforces agent misconduct in Milton?
A: RECO enforces Realtor conduct in Ontario. If an agent failed to present offers or mishandled trust funds, file a complaint with RECO and keep records.

Q: Should I try to mediate before suing?
A: Yes. Mediation or negotiation often saves time and money. But don’t delay legal action unduly — important deadlines and evidence preservation matter.

Q: Where do I file a claim in Milton?
A: Major contract claims go to the Ontario Superior Court of Justice. For smaller claims under the monetary limit, Small Claims Court may apply.

Q: Who should I call in Milton for help?
A: Contact a qualified Milton real estate lawyer immediately. Also involve your Realtor to manage practical tasks and documentation. For direct Realtor help, contact Tony Sousa at tony@sousasells.ca or 416-477-2620.

If you want a free quick checklist tailored to your Milton deal (what to collect, who to call, sample demand letter language), email Tony at tony@sousasells.ca and he’ll send it within one business day.