Any offer or counter-offer can be withdrawn if there is a time limit on the offer or counter-offer and it passes without being accepted. It can also be withdrawn before the other party formally accepts it (that is, with his or her properly witnessed signature). Although offers and counter-offers are normally irrevocable during a time-period specified by the offeror, if there has been no acceptance of the offer, and consideration (or payment) has not been made, then there is no legal contract. It is unlikely, therefore, that the offeror would be legally required to keep the offer open.

Real estate matters such as cancelling an offer or purchase agreement can be complicated and involve large sums of money. To get help, ask a lawyer now.

10-day cooling-off period, Homeowner Protection Act

Under Part IV of Ontario’s Homeowner Protection Act, buyers of new freehold homes have 10-days within which they may cancel an agreement of purchase and sale without penalties. The cancellation must be in writing.

 “New freehold home” means a new home as described in section 1 of the Ontario New Home Warranties Plan Act:

(a)  a self-contained one-family dwelling, detached or attached to one or more others by one or more common walls,

(b)  a building composed of more than one and not more than two self-contained, one-family dwellings under one ownership.

Purchasers of newly built condominiums in Ontario also have a 10-day cooling-off period to back out of purchase agreements.

For more information, refer to the Homeowner Protection Act.

An Agreement of Purchase or Sale may also be terminated if it becomes impossible to perform through no fault of either party (lawyers say such a contract is “frustrated”). An example is property destroyed in a flood or a fire before the buyer has taken possession.

However, once the offer or counter-offer has been formally accepted, and after the 10-day cooling-off period has passed, the buyer and seller are bound legally by its terms. If you walk away from a deal you will not only lose your deposit but may also be liable for any damages suffered by the other party, such as the lost opportunity to sell to someone else, expenses arising from a delayed move, or the seller’s loss of deposit on another home intended for purchase. The legal remedy, called “specific performance” (making you complete the purchase), is an unlikely event, but a court could still hold you responsible for the entire purchase price, plus expenses and court costs.

What if your new home builder raises the cost, can you cancel?

For buyers of newly built homes, if a builder asks the buyer to pay more for a home than what is in the Agreement of Purchase and Sale, they should provide reasons and sufficient evidence. Still, new home buyers should be aware that increased costs alone are not a permitted reason to cancel the sale.

As per the Home Construction Regulatory Authority (HCRA), the regulator responsible for licensing the people and companies that build and sell new homes in Ontario, contracts can only be terminated for reasons outlined in an Agreement.

However, when proposing that the buyer pay a higher price than in the signed contract, licensed builders must take the following steps, or they could face professional misconduct charges that may result in license suspension or revocation. According to the HCRA, builders must:

• Advise buyers of the amount of the increase and the reason for it. This includes a summary of how the increase was calculated and how the figure is different from the initial budgeting for the project.
• Advise buyers of all their options, including the option to continue with the original signed Agreement.
• Recommend that buyers obtain legal advice from a lawyer who is familiar with real estate transactions.

View New home considerations for more information.

For more information about buying or selling a home, contact the Ontario Real Estate Association, or visit orea.com.

Need help with a Deposit?

A Home Deposits Now Guarantee provides a stress-free alternative to obtaining a deposit. You do not need to borrow from friends and family, liquidate investments and pay breakage and interest fees, or obtain certified cheques, a line of credit, or bridge financing. Home Deposits Now issues a Guarantee that your Realtor submits along with your offer, instead of a cash deposit or certified cheque. For a quote, use the Cost Calculator.

The online application takes only minutes to complete. Visit Home Deposits Now to apply for a Deposit Guarantee.

Get legal help

Real estate matters involve large sums of money and complicated legal issues. To get help, ask a lawyer now.

								
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