Real estate contracts, like the homes they represent, require a firm foundation built on clarity and meticulous attention. But when disaster strikes—such as a fire that turns a cherished century home to ash—those foundations are put to the ultimate test.
Consider the recent case of McDonald v. Lowrie (2025 ONSC 1397), where an Ontario buyer’s dream of restoring a historic century home went up in flames – quite literally.
In May 2024, Grant McDonald had his eye on a picturesque century home nestled on two acres near Tillsonburg, Ontario. The property was listed at $775,000, and McDonald secured the purchase with a $25,000 deposit, anticipating the joys and challenges of restoration. Yet fate had other plans: shortly before the deal was finalized, a devastating fire completely engulfed and destroyed the historic residence.
At the heart of this dispute was the standard Ontario Real Estate Association (OREA) insurance clause, which presented McDonald with a clear choice in the face of substantial damage: either cancel the agreement and reclaim his deposit, or proceed with the purchase and accept whatever insurance proceeds the seller received.
Instead, McDonald introduced a complication. He requested the seller guarantee a minimum amount from the insurance settlement – a demand not stipulated in their agreement. When the seller refused to accommodate this new condition, maintaining strict adherence to the original contract terms, McDonald asserted the seller had breached their obligations and refused reasonable extensions. The disagreement escalated to Ontario’s Superior Court.
The court’s decision was swift and unequivocal. It ruled that the seller had acted within their contractual rights, emphasizing that introducing additional conditions after an agreement is signed was unacceptable. McDonald’s insistence on new terms led the court to conclude he had effectively repudiated the agreement, resulting in the forfeiture of his $25,000 deposit.
Essential Takeaways for Buyers and Sellers:
- Deadlines Matter: Courts rigorously enforce “time is of the essence” clauses. Extensions beyond original terms are a courtesy, not a requirement.
- Insurance Clauses are Explicit: The OREA insurance clause offers specific options. Buyers must understand these clearly and cannot add further conditions post-agreement
- Deposits Are At Stake: Attempts to revise terms mid-transaction can jeopardize a buyer’s deposit. Clearly defined contracts protect all parties involved.
Ultimately, McDonald v. Lowrie serves as a powerful reminder that precision and adherence to clearly defined contractual terms are crucial in real estate transactions. As this case highlights, understanding—and respecting—the specifics of your agreement is essential in safeguarding your interests.
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