What You Need to Do When Your Real Estate Transaction Doesn’t Close

Real estate transactions in Toronto can be complex, and while most deals close smoothly, there are instances where they fall apart at the last minute. Whether you are a buyer or a seller, a failed real estate transaction can be financially and emotionally distressing. Understanding your legal options and next steps is critical to protecting your interests.

At Alexander Hu Law, we specialize in Toronto Real Estate Law and have extensive experience guiding clients through complex property transactions. If your deal doesn’t close, consulting a Toronto Real Estate Lawyer can help you mitigate losses and explore potential legal remedies.

Why Do Real Estate Transactions Fail?

Several factors can lead to a real estate transaction not closing. The most common reasons include:

Financing Issues – Buyers may fail to secure mortgage approval before the closing date, leaving them unable to fulfill their purchase obligations.
Failure to Meet Contract Conditions – The Agreement of Purchase and Sale (APS) may have conditions (such as a home inspection or financing approval) that are not met, leading to termination.
Title Issues – Undisclosed liens, boundary disputes, or legal claims on the property can prevent a smooth transfer of ownership.
Buyer or Seller Default – Either party may back out due to breach of contract, misrepresentation, or an inability to meet closing obligations.
Legal or Regulatory Barriers – Zoning violations, unpaid property taxes, or other legal issues may halt the closing process.
Market Fluctuations – In a volatile real estate market, a buyer may reconsider their purchase due to declining property values, or a seller may receive a higher offer and attempt to back out.

Steps to Take If Your Real Estate Transaction Fails

If your real estate transaction does not close, acting quickly and consulting a Toronto Real Estate Lawyer can make a significant difference in how you recover.

Review the Agreement of Purchase and Sale (APS)
The APS is a legally binding contract that outlines both parties' obligations. If a deal falls through, reviewing the APS can clarify:
- Whether any conditions were not met (e.g., financing, home inspection).
- The agreed-upon remedies for a failed closing.
- Whether a deposit is refundable or can be forfeited.
A Toronto Real Estate Lawyer at Alexander Hu Law can assess your APS and advise on your legal rights.
Determine Who is at Fault
Identifying the party responsible for the failed transaction is crucial
- If the buyer fails to secure financing or backs out without cause, the seller may be entitled to retain the deposit or even pursue legal action for damages.
- If the seller refuses to complete the sale, the buyer may seek specific performance (forcing the seller to complete the transaction) or claim damages.
- If the failure was due to external factors (e.g., title issues, regulatory barriers), both parties may need to negotiate an alternative resolution.
Understand Your Deposit Rights
In most Toronto real estate transactions, buyers place a deposit held in trust by the seller’s brokerage or lawyer.
- If the buyer breaches the contract, the seller may be entitled to keep the deposit as compensation.
- If the seller breaches the contract, the buyer may demand the deposit back and potentially sue for additional losses.
- Disputes over deposits often require legal intervention from a Toronto Real Estate Lawyer to resolve.
Negotiate a New Closing Date or Agreement
In some cases, the failed transaction may be salvaged with adjustments, such as:
- Extending the closing date to allow the buyer time to secure financing.
- Resolving title issues or legal disputes before proceeding with the sale.
- Adjusting the purchase price or contract terms to satisfy both parties.
A skilled Toronto Real Estate Lawyer can assist in negotiating solutions that prevent litigation.
Consider Legal Action for Breach of Contract
If a party fails to close without legal justification, the other party may pursue:
- Specific Performance – A court order forcing the sale to proceed under the original terms.
- Monetary Damages – Compensation for financial losses, such as additional mortgage costs, lost deposits, or changes in market value
Legal action can be complex, so consulting a Toronto Real Estate Lawyer at Alexander Hu Law is essential to evaluating your options.
Explore Alternative Resolutions
Sometimes, mediation or settlement agreements are preferable to costly litigation. Legal representation can help negotiate a fair resolution that minimizes expenses and risks for all parties involved.

How Alexander Hu Law Can Help

When a real estate transaction doesn’t close, the consequences can be significant—financial loss, legal disputes, and uncertainty. At Alexander Hu Law, we specialize in Toronto Real Estate Law and provide expert guidance to both buyers and sellers facing failed closings.

Why Choose Us?

Experienced Toronto Real Estate Lawyer – We have extensive knowledge of real estate contracts, negotiations, and legal remedies.
Personalized Legal Solutions – Every real estate case is unique, and we tailor our strategies to your specific needs.
Efficient and Professional Representation – We work swiftly to resolve disputes, protect your financial interests, and pursue legal action when necessary.

Need Legal Assistance? Contact Alexander Hu Law Today!

If your real estate transaction did not close, don’t navigate the legal complexities alone. Call Alexander Hu Law to schedule a consultation with a trusted Toronto Real Estate Lawyer and protect your rights.