In real estate, even a minor change can undo what looks like a firm deal. In the recent Ontario decision of Ali et. al. v. Patel et. al., released on June 24, 2024, the sellers lost out on $50,000 and had to resell their property at a loss – all because of a small procedural detail that unraveled a seemingly firm agreement.
The Offer that Fell Apart
In this case, the buyers submitted a firm, no-conditions offer on a home. The price, deposit, and closing date were all agreed upon, and the sellers were ready to accept. However, the sellers returned the signed agreement with one small addition: Schedule B. This Schedule was routine as a result of the COVID-19 pandemic, it addresses logistical issues like banking delays and office closures.
The sellers viewed this as a routine part of the deal, especially since the MLS listing had mentioned Schedule B was required. They assumed adding it wouldn’t change the agreement. But overnight, the buyers reconsidered their decision, and by the next morning, they backed out of the deal. Since Schedule B was added after the initial offer, it created a new counteroffer, allowing the buyers to argue that no binding contract existed.
The Loophole that Cost $50,000
The sellers believed the deal was sealed. The essential terms – price, deposit, and closing date – had all been agreed upon, and they saw Schedule B as merely formalizing what had already been mentioned in the MLS listing. But in contract law, any change to an offer, even a minor one, creates a counteroffer that both parties must agree to. The buyers had not signed off on the revised contract with Schedule B, meaning no binding agreement had been formed.
As a result, the court ruled in favor of the buyers. The sellers were left without their $50,000 deposit and had to relist the property, eventually selling it at a $25,000 loss.
In real estate, even the tiniest misstep can trigger costly consequences. This decision is a powerful reminder that the basic principles of contract law – like offer and acceptance – aren’t just legal formalities; they’re the foundation of every deal.
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