Undoing a Mistaken Real Estate Contract
Published on 29 August 2022, 07:22:56 AM
You must have heard your realtor wrong, and now you’re wondering about the legalities of undoing a mistaken real estate contract. You owe it to yourself to fix genuine mistakes you make signing a home buyer contract, and to know what you are agreeing to.
Can You Rescind a Contract on the Basis of a Mistake?
Like most legal questions, the answer is maybe. Before you get your hopes up, let’s explore what types of mistakes allow rescission of a mistaken real estate contract. It’s called a non est factum (not by my doing) defence.
3 Requisites for Contracts to be Rescinded
You believe you signed a mistaken real estate contract, but can you meet the three requisites for a contract to be rescinded?
- You read the contract.
- You were genuinely mistaken about its nature.
- That mistake resulted from another party’s misrepresentation.
Only your lawyer or a court have the power to rescind a mistaken real estate contract.
Ontario real estate law questions you ask us.
Other Grounds to Rescind a Contract
But you may also be able to void a contract:
- Signed under duress.
- Or that contained a significant misrepresentation that caused you to sign.
See what is undue influence.
Did GTA Buyer Owe Double Commission?
A Greater Toronto Area resident whose families’ offer to purchase was rejected used the non est factum defence when she was asked to pay a commission by a realtor she was no longer using (Sutton Group-Admiral Realty Inc. v Taborovska, 2021 ONSC 2837).
Ganna’s parents, who lived overseas, signed a buyer representation agreement (BRA) in November 2018, committing their daughter to using the realtor until the real estate contract expired.
Your realtor’s duty to you.
Ganna wasn’t familiar with how a real estate contract works. When the Mississauga deal fell through, she used a new realtor to make a successful offer on a Toronto home 10 days later. The deal should have been a source of joy. But Ganna’s first realtor demanded a 2.5% commission on the Toronto home. Complain about an Ontario realtor.
Who’s at Fault for Mistaken Real Estate Contract?
At trial, the Ontario Supreme Court agreed while Ganna had also signed the BRA, the realtor had discussed the contract and property negotiations with her father, not her. The realtor failed to explain to Ganna’s father that the home buyer contract applied to any property the family purchased, not just the Mississauga home.
Ganna’s understanding of the BRA came from her father’s explanation, which was wrong. But was Ganna careless in signing the real estate contract, and was she using that to avoid liability for the commission? The realtor argued she had a legal obligation under Ontario law to read a home buyer contract before consenting to it (Isaacs v Royal Bank of Canada, 2010 ONSC 3527).
How real estate deposit rules (Ontario 2021) affect you.
When a Mistaken Real Estate Contract is Void
Now generally speaking, not reading a document is no defense for being mistaken about its contents. However, the realtor had not explained the mistaken real estate contract to Ganna. She instead relied on her father’s understanding of the contract, provided by the realtor, and that was misrepresented. The BRA was unenforceable, the court ruled, and that made the realtor’s commission void.
3 Most Common Mistakes in a Real Estate Contract
Misrepresentation is only one cause of a mistaken real estate contract. You may be able to rescind a contract of sale if your agreement contains these common mistakes.
- Real estate listing was exaggerated.
Realtors can be inventive in listing a property for sale. Clients have sued when a property failed to deliver on promises a realtor made about its condition, or what’s included, such as a peaceful location (a block away from a busy roadway).
Why how you word your offer makes a difference.
- Realtor didn’t check local conditions.
A realtor who fails to explain local bylaws or environmental issues that could affect your property can be taken to court over a mistaken real estate contract. If you buy, then suddenly discover you’re living on a known floodplain or former landfill, it could be time to see a lawyer.
- Property had discoverable defects.
A firm offer real estate deal can leave you dangling if a realtor fails to arrange for a SPIS (seller property information sheet), or makes light of costly defects. Your purchase is in potential legal jeopardy, and so are you. Voiding preconstruction condo sales.
Why making a firm offer for real estate is never a safe bet.
Why You Need a Real Estate Lawyer
Axess Law takes the guesswork out of finalizing real estate deals. When you need a real estate lawyer (Ontario), we have licensed legal professionals nearby you.
We review your agreement of purchase and sale for essential clauses that allow you to withdraw if a home inspection goes poorly, or your mortgage lender’s property appraisal comes up short.
When to include a home inspection clause.
Axess Law refers you to our trusted legal partners when you may have grounds for rescinding a contract. You can simply change your mind and withdraw from a sale once the irrevocable period is over, but you may lose your deposit and owe other penalties for a seller’s lost profits or expenses.
Our virtual real estate lawyers liaise with your lender to process new mortgage loans, or discharge loans on property you sell at the same time. When you need more time to find financing, we negotiate with the sellers’ lawyer. Your deposit is protected in a trust account until all the conditions in your agreement of purchase and sale are satisfied.
And once you’re ready to close, we witness your signature on the final documents, and give you the keys to your new home. Confirm your mortgage broker is licenced to practice in Ontario.
Change an offer to purchase when financing falls through.
Affordable Legal Services, Anywhere in Ontario
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy a home in the GTA, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Find an Axess Law real estate lawyer (Toronto).
Book a Real Estate Lawyer Online
Access law services near you without leaving home. Book remote real estate lawyer appointments online, or visit our open law offices in Greater Toronto Area and Ottawa, to find times that work for your schedule. Dial our 647-479-0118 lawyer line (toll free to 1-877-552-9377) to speak with a live operator and arrange convenient appointment times.
Axess Law has onsite parking, and is easily accessible by public transit.
