Court ruling enforces contract terms after buyers fail to secure financing
Three prospective homebuyers in British Columbia have been ordered by the province's Supreme Court to pay over $350,000 after cancelling a contract signed during a hot housing market.
Justice Dennis Hori ruled that Navdeep Singh Mahli, Wai Ming Fong, and Xiao Li Liu are liable for breach of contract after agreeing to purchase a home in Kelowna for $1,115,000 but failing to complete the transaction due to financing issues.
“When the defendants failed to complete the Contract, the plaintiff found himself in a real estate market that was falling sharply,” Justice Hori wrote in his decision.
Court documents showed the property was eventually resold for $740,000 in January 2023, much less than the original agreed price.
The defendants missed the July 18, 2022, purchase deadline after multiple banks refused to finance the deal, citing the property's value as "significantly lower" than the agreed price.
According to the ruling, Mahli had "specifically waived the right to have a subject to financing clause."
The property seller, Jeffrey Anton Mandl, sued the defendants for breach of contract. The buyers counter-sued, alleging "fraudulent or negligent misrepresentations," but the judge dismissed these claims.
The court said that even though Mahli's realtor had reportedly found the home uninhabitable after inspection, no evidence was provided to support this claim.
Justice Hori explained that the defendants had refused their right to a property disclosure statement, "accepting the property 'as is,' and specifically relinquishing any claims of liability and responsibility against the seller."
The court rejected the defendants' arguments that the seller could have extended the contract deadline, reduced damages, or lowered the purchase price.
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"The defendants did not supply any information they would be able to complete under these proposed conditions," the judge stated.
The final judgment requires the defendants to pay $362,920, including the difference between the original agreed price and the eventual sale price (minus a $50,000 deposit) and additional damages covering legal fees, utilities, mortgage, property taxes, and repairs.
Justice Hori said, "In a falling market, the court should award the vendor damages equal to the difference between the contract price and the highest price obtainable within a reasonable time after the purchaser's breach of contract."
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