In a recent Ontario case, homebuyers were awarded $150,000 in damages after a contract for the purchase of a “unique” home was rescinded by the homeowners.
Homeowners Rescind Purchase Deal
The homeowners owned a property in Ontario. On June 28, 2016, the buyers entered an agreement of purchase and sale with the homeowner to buy the property for $940,000. Though the deal was set to close on September 28, 2016, the homeowners rescinded the agreement on September 7, 2016 and returned the buyers’ deposit. The buyers turned to their real estate agent to find another property. However, they were unable to find a property that contained the same characteristics for a similar price and ended up buying a smaller home for $5,000 more.
As a result, the buyers sued the homeowners. They claimed that the original property was unique and sought damages for the failed sale. The buyers claimed that the property was particularly attractive because it was on a cul-de-sac, situated on a golf course and within walking distance of a particular religious temple, among other characteristics, and stated that it had more attractive attributes than the home they ended up buying. Additionally, based on 2019 and 2020 appraisals of both properties, the value of the homeowners’ property had increased significantly compared to the home the buyers’ ended up purchasing. Therefore, the buyers claimed additional damages for the net differential increase between the two properties.
The homeowners responded that the property was not unique.
Combination of Factors Qualified Property as “Unique”
The court began by noting the reasons given by the buyers as to why the property was unique to them, which included:
- It was in the area they wanted;
- It was close to a religious temple;
- It was close to a school;
- It was close to the golf course;
- It was close to a highway;
- It had 4 bedrooms;
- It had a finished basement; and
- It had a large lot size.
The court then stated:
“None of these characteristics are unique by themselves. However, when these characteristics are considered in total together with the sole availability of a property with these characteristics during a “hot” and rising market, this Property was unique.
The uncontroverted evidence is that there was no other property (including the [other property] which they eventually bought) which met the [buyers’] “wish list”. The [buyers] had to settle for the [other property] in the circumstances, particularly given their budget and the fast-rising prices in the area and no other home with similar characteristics.
The difficulty the [homeowners] face is that they have not led ANY evidence that the Property was not unique or that there were other comparable substitute properties available at the time. […]
Uniqueness must take into account all the surrounding circumstances, including the purchaser’s “wish list”, the market conditions, the location, the type of home, the condition of the home, the lot, the finished areas of the home, the quality of finishes, the availability of comparable homes with the same attributes in the same price range, the proximity to certain amenities and so on.”
The court concluded that the property was unique.
Failure to Award Damages to Buyers Would Have Been Inequitable
Turning to the measure of damages, the court noted that the homeowners’ property had appreciated $220,000 to March 2020, while the property purchased by the buyers had appreciated $70,000 during the same period.
The court stated that this meant that had the buyers closed on the original property they would have been financially ahead by $150,000 at the time. The court stated that by awarding the buyers that amount, it would be putting them in the same financial position they would have been had the purchase of the property been completed.
While the homeowners claimed that by buying an alternate home, the buyers had essentially mitigated their damages, the court disagreed. Instead, the court stated that to accept the homeowners’ position would permit them to have breached the agreement of purchase and sale and walk away paying only minimal damages. The court found that such an approach would be inequitable and would prevent purchasers, whose agreement had been breached by the vendor, in acquiring a new home rather than waiting for specific performance years later in an expensive legal proceeding.
Finally, the court found that to deny the buyers’ claim would allow the homeowners to benefit from their breach because they would continue to benefit from the appreciation in the property and pay minimal damages. The court stated that such an approach would encourage vendors to breach their agreements of purchase and sale in a “hot” market.
As a result, the court found in favour of the buyers and ordered damages in the amount of $150,000.
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