# Little bit of a hiccup



## Misanthrope (Jun 23, 2017)

My family recently had their listing sold and closed on April 19. 
The house is located by Royal York subway station, great location.
Now the sellers are making up excuses to get out of the contract, when in fact, whatever excuses (which there are 2 apparent breaches of contract on our parts)----we never breached any.
Everything that was needed to be done, was documented and well yeah, zero breaches of contract....but plenty of wanting to get out of the contract. lol

I guess when the market makes a bit of a correction, they'll throw anything and the sink to bail.

So, would it be best to wait for the fall to see if things pick up? Or, throw back onto the market and if we don't get the same price, sue them for the difference?
I'm suggesting to my mother/father to do exactly just that, while my other brother is suggesting rent for a year, then sell.


Thanks fellas and ladies.


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## OnlyMyOpinion (Sep 1, 2013)

You do not provide enough information - what is your acting lawyer and agent saying? How much deposit do you have that will be kept in event of default? Is this their principal residence, why are they selling, is the house sale critical to their life/financial plans, etc.

Added: If it is a rental, keep the deposit and relist now or rent again and sell later, which ever makes sense to their overall intentions. Trying to sue after that would be a waste of time IMO.


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## Misanthrope (Jun 23, 2017)

Okay:
Lawyer: gave the options and says the decision is ultimately up to both my father/mother and that they have up to two years to pursue the first buyers for any difference in the price.

The deposit I THINK I heard from my brother was only 0.03%. Fairly certain that's the number as my father wasn't all too thrilled with it but according to the agent who's a family friend "it's fine, these guys are good for it".
The antics that followed that night at the dinner table, well, not so good. 

This is where we all live yes, so it is our principal. In my families eyes, yes it's critical to the rest of our lives as we are looking to downsize a fair bit since my brother, sister and myself will be moving out within a year to pursue our careers and school. Parents want a smaller, home outside of the city.

Suing after doesn't make sense? From what I've read, you can only sue after you sell, then sue for the difference. So how can suing be a waste of money?


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## Misanthrope (Jun 23, 2017)

last sentence should have read-------> How can suing be a waste of time? According to my dad's lawyer, he has up to two years to sue.


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## Mortgage u/w (Feb 6, 2014)

Live and let live.

No use forcing someone to buy something they don't want. You'll just end up getting frustrated for a very long period of time and ultimately, lose out on future buyers for a potentially better deal. The only winner in a lawsuit is the lawyer. No one else.

Do yourself and your family a favor - live and let live.


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## kcowan (Jul 1, 2010)

I would move on and try to resolve the sale within 2 years. Then sue if it makes sense.


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## Misanthrope (Jun 23, 2017)

Mortgage u/w said:


> Live and let live.
> 
> No use forcing someone to buy something they don't want. You'll just end up getting frustrated for a very long period of time and ultimately, lose out on future buyers for a potentially better deal. The only winner in a lawsuit is the lawyer. No one else.
> 
> Do yourself and your family a favor - live and let live.


I think you misunderstood, maybe not, apologies if you didn't. But the lawyer suggest to list again, see what my parents get for the house now at this point, then sue the developers for the difference. The original buyers were apparently developers, not a family of any sorts. This is why my father is leaning towards the idea of litigation, guys just buying to flip and make money off of others, so his mentality is, why should we suffer the consequences while they buy'flip'n'capitalize off others.


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## nobleea (Oct 11, 2013)

If it closed on Apr 19, then they should already have paid you and have title.
I assume you mean it went unconditional on Apr 19?

This is what the deposit is for. It should be based on what the market could drop and how much the selling price would be affected, as well as any drop in sale price by having to sell in a non-ideal season.

I would absolutely sell it at market (list it on MLS to convince a judge it is the true market price), then sue for the difference. If it's more than 30K, it'll probably be worth it. Less than that probably not worth the hassle with lawyer fees and time in courts, etc. There's also the chance that they'll not honour any judgement. A good lawyer would probably put a lien on their other properties as soon as litigation is served.


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## Mortgage u/w (Feb 6, 2014)

Misanthrope said:


> I think you misunderstood, maybe not, apologies if you didn't. But the lawyer suggest to list again, see what my parents get for the house now at this point, then sue the developers for the difference. The original buyers were apparently developers, not a family of any sorts. This is why my father is leaning towards the idea of litigation, guys just buying to flip and make money off of others, so his mentality is, why should we suffer the consequences while they buy'flip'n'capitalize off others.


I did understand. In essence, you are stooping to the same level as the developer. No offence intended but just as he is trying to capitalize, so are you.

Had he never come along, you would have simply sold to the next person in line. Its not like you had 2 offers on the table, chose his and then lost the other because he backed out. That would be a different story.


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## Mukhang pera (Feb 26, 2016)

Misanthrope said:


> The deposit I THINK I heard from my brother was only 0.03%. Fairly certain that's the number as my father wasn't all too thrilled with it but according to the agent who's a family friend "it's fine, these guys are good for it".
> The antics that followed that night at the dinner table, well, not so good.
> 
> Suing after doesn't make sense? From what I've read, you can only sue after you sell, then sue for the difference. So how can suing be a waste of money?


A deposit of 0.03%. That's nuts, if true. A serious purchaser would put up 10%. I have never put up less than 5%. Your folks should be taking the realsnake out to the woodshed, to be sure.

The facts are still a bit fuzzy. The "closing date" in a real estate transaction is the date when the title and the money change hands. Here, by reference to closing, it sounds like the closing date came and went, title documents were tendered at or before closing, but the purchaser defaulted in tendering the purchase monies. But it also sounds like April 19 was perhaps the date on which the purchaser lifted any subject clauses and the contract became final and binding. In that case, what date was set for closing? Has it passed? You say: "Now the sellers are making up excuses to get out of the contract." Are they looking to avoid a closing the time for which has not yet arrived?



nobleea said:


> If it closed on Apr 19, then they should already have paid you and have title.
> I assume you mean it went unconditional on Apr 19?
> 
> This is what the deposit is for. It should be based on what the market could drop and how much the selling price would be affected, as well as any drop in sale price by having to sell in a non-ideal season.
> ...


Dealing with remedies, the "innocent party" in a failed real estate transaction usually has a choice of remedies. To some extent they will be as set out in the contractual documents. In the case of a vendor where the purchaser is in default, the vendor may retain the deposit as liquidated damages. Sometimes that is the only remedy allowed. Here, that sounds like no remedy at all if it is, in fact. .03%. Many contracts stipulate that the deposit may be retained and applied to damages. What that means if the sale price was to be $1 million, the deposit was $100,000 and the vendor re-lists and sells for $850,000, the vendor may keep the $100,000 to be applied to an ultimate judgment for $150,000. 

It is also the case that the jilted vendor has an election to make at the start. He (I'll refrain from going all pc, saying he or she, or s/he, or spelling out "the vendor" repeatedly) may elect to accept the purchaser's repudiation of the contract and sue for damages (or forfeit the deposit, or both). A second choice is to not accept the repudiation and to treat the contract as on foot and sue for specific performance, i.e., an order requiring the purchaser to do as it promised and close the deal. Vendor actions for specific performance are relatively uncommon.

If there are plans to sue for damages, the measure of damages will be the difference between the contract price and the best price reasonably achievable by acting promptly and putting the property back on the open market. The vendor must do what lawyers call "mitigating damages", i.e., act with dispatch to get the place sold for the best price with the least cost involved. One cannot sit by for 2 years in a falling market and sell at a lower price than could have been obtained by acting quickly and then expect the purchaser to pay the full difference.

As to whether a lawsuit will be "worth it" is always a nice question. I always used to tell clients "You have to be rich or crazy to start a lawsuit." Those words remain as true today as back then. Time has served only to enhance their meaning. If I were in law practice today, I would probably advise clients that there is no point in retaining counsel to commence an action unless at least $100,000 is at stake. Thirty years ago I used to put it at around $30,000. The Provincial Court small claims monetary jurisdiction in BC has recently increased to $35,000 and, if I had a claim for damages of, say, $50,000 or so, I would waive the excess and sue for $35K in small claims, where no costs are awarded. Even with an award of party party costs, a $50,000 "win" in Supreme Court will see the net recovery significantly eroded by unrecoverable costs. In the superior courts it is easy to be looking at costs of $50,000 even before the trial date arrives. On that score, Misanthrope, you ask: "How can suing be a waste of time? According to my dad's lawyer, he has up to two years to sue." Did your dad's lawyer happen to mention that he will charge in the order of $400 and hour, will require a retainer of at least $10,000 and expect dad to shell out twice that by the time discoveries have been completed? Anyway, the 2 years is a reference to the limitation period. If dad sells now at a loss, why wait 2 years to pursue it? Perhaps because of a need to build up a war chest to fund the lawsuit. That I understand. It is a reflection of the expression known to anyone who has been to law school: "Justice is open to every man, just like the Ritz Hotel". 



nobleea said:


> There's also the chance that they'll not honour any judgement. A good lawyer would probably put a lien on their other properties as soon as litigation is served.


The valid point there has to do with collecting on any judgment. It's often easy to get judgment. Collecting is another matter. Before starting a lawsuit, it pays to learn about the defendant. Here, there's reference to a "developer". I am guessing said developer is a limited liability company. Many developers incorporate a new company for each deal. Until the deal is consummated and they have title to the land and development is underway, the company has no assets. Even when it does, they will probably be heavily encumbered, so there is no equity in the property. Anyone engaged in the risky business of property development knows how to be judgment-proof. If a company was the purchaser here, I'll bet the realtor who let a deposit of almost nil slip by certainly did not suggest taking the personal covenant of the company principals. Even they might not be solvent. Many are what I call "professional debtors". They know how to avoid personal liabilities. So, in sum, one must make an accurate assessment of the ability of any intended judgment debtor to pay.



nobleea said:


> There's also the chance that they'll not honour any judgement. A good lawyer would probably put a lien on their other properties as soon as litigation is served.


That might be a good tactic in some places, although I would find that surprising. It certainly would not fly in BC. The only lien mechanism available would be in the form of a caveat or an LP (lis pendens) - sometimes called a CPL or Certificate of Pending Litigation. The courts here take a dim view of using those tools as a club. They may only be resorted to where the idea is to protect the property from being sold, encumbered, etc. pending trial of an action where the claim is for the property or an interest in the property itself. So, here in BC, no decent lawyer would pull such a stunt. It only serves to give the lawyer a bad reputation and it exposes the client to substantial costs when the other party goes to court to have the charge removed from their land. To support this comment I cite a snippet from a recent BC case:

Drein v. Puleo, 2016 BCSC 593

http://www.courts.gov.bc.ca/jdb-txt/sc/16/05/2016BCSC0593.htm

[10] A reader will infer, from what is written above, the Court's concern about a party seeking to use a CPL as a bargaining tool to extract prejudgment payment of a financial claim. If the CPL was allowed to remain on the terms proposed by Ms. Drein, she would be obtaining a pre‑trial enforcement of her monetary claim before she has established her case. As tempting a tactic as that might appear, that is not what CPLs are intended to protect. They are designed to preserve land claims pre‑trial by preventing the land from passing to innocent third parties pre‑trial, thereby undermining the claim. If the claim in essence is not for an interest in land, CPLs are not intended to be one of the weapons in a claimant's war chest.


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## banjopete (Feb 4, 2014)

Pretty enlightening response there Mukhang pera. This is a story that is starting to be more common from what I'm reading. Either way they want to sell, but getting paid any assessed damages seems like more work than it could be worth, especially given the business setup and limited liability strategies highlighted above.


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## mikep (Mar 13, 2017)

did the property close on april 19 or it was sold conditionally on april 19?

royal York and bloor eh.. the properties just north of eglinton on royal York have gone down about 18% since april. they are back to spring 2016 levels


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## Just a Guy (Mar 27, 2012)

Sounds to me like this was supposed to be a quick flip gone bad. Many real estate "investment" clubs preach doing things like this. Put down basically no money to secure the place, then try to resell the property to someone else before closing for more and pocket the difference. They probably had no intention of ever owning the place at all. This is an assignment of sale (I think it has another name as well, but I can't remember it as I find it more of a scam than legitimate investing, so I don't really keep track of it). The problem arises when you can't find a buyer and need to actually close (most people who do this are trying to make money with "no money"). 

The general idea is I come to you, negotiate a price, then sell the "assignment" of that house to someone else for more (generally a few thousand dollars) and pocket the difference. It's thought of as a "finders fee", basically an unlicensed realtor. There were generally a lot of books and seminars promoting this kind of thing during the boom years. There's nothing technically illegal about it, but it's not exactly proper either in my books.

Though, to be fair, many people have offered to pay me to find and negotiate properties like I find for myself, so I suppose if you look at it like that, it would be okay. Personally I always refuse, I'll either help you find a place or not. If I'm going to do all the work myself, I may as well keep it. If you're willing to do the work, I'll probably help you find your first one I've helped a few people buy their first property.


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## OhGreatGuru (May 24, 2009)

As others (and the lawyer) have suggested, move on. Your parents should re-list, then talk to their lawyer about whether it's worthwhile suing, after it is has been determined if they have actually suffered a loss, and how much.

They should fire their "family friend" real estate agent who recommended they accept a 0.03% downpayment.


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## Mukhang pera (Feb 26, 2016)

It would appear that the OP has left the building.


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