There is a common misconception in real estate transactions that the seller has unequal bargaining power because they are typically the one to draft the contract. This is incorrect. In contract law, a fundamental principle, known as contra proferentem, recognizes that, where there is any ambiguity, or more than one interpretation, in a contract, that ambiguity should be used against the person who drafted the contract in a legal proceeding.
An agreement of purchase and sale is the contract used to purchase residential property. This contract contains several terms and conditions, such as an irreversible clause, which specifies the date beyond which the offer becomes void if it is not accepted. Once the offer is accepted, the contract becomes legally binding and cannot be terminated or withdrawn unless both parties provide their consent.
In a recent decision, Warner v. Ahmadi, the Superior Court of Ontario affirmed the rights of buyers in residential real estate transactions. In this case, the buyer brought a request for summary judgment and requested specific performance, which is an equitable remedy that requires a party to fulfill their obligations in a contract.
In August 2021, the buyer, Wendy Warner (“Wendy”), signed an agreement of purchase and sale for a condominium unit. The seller, Maarouf Ahmadi (“Maarouf”), agreed to sell the property to Wendy for $340,000. Eventually, Maarouf did not end up following through with the agreement because his wife opposed the sale. This occurred after Maarouf repeatedly extended the closing date for the transaction. Eventually, Wendy insisted that the agreement of purchase and sale was in full force and effect.
The Court granted summary judgment in favour of Wendy and granted specific performance. The Court determined that Maarouf breached the agreement, and required him to complete the transaction. The Judge explained that the contra proferentem principle applied because the agreement could be interpreted based on the wording as a firm contract, not contingent on spousal approval from Maarouf’s wife. The Court also ordered that Wendy’s deposit should be credited towards the purchase price.
In May 2022, Wendy brought a request to a Judge to ask the court to amend its order to compensate her for her losses and the additional expenses she incurred because of Maarouf’s failure to perform the contract. Wendy suffered about $10,000 in losses, and she would have been able to get a mortgage at the initial rate of 3.84%, instead of the then current rate of 4.505%.
The Judge agreed with Wendy and ordered Maarouf to pay her legal expenses, moving charges, and $292.67 each month that passes between the cancelled closure date and the new closing date. Maarouf was also responsible for paying Wendy the difference between the mortgage rates available to her at closing for the next five years.
Walker Law can assist you with your commercial or residential real estate disputes. If you have questions about this article, please contact our real estate litigation lawyers.
This article is intended for information purposes only. It is not intended to provide legal advice. If you have questions, please contact a lawyer.