It often only takes minutes to sign an Agreement of Purchase and Sale (“APS”) to purchase a dream property at what one considers to be a “fantastic” price. However, if the buyer’s bank doesn’t think the property is “fantastic” and refuses to finance the purchase, the buyer would need years to pay off the judgment for hundreds of thousands of dollars resulting from the failed closing.
Buyers acting without advice from brokerage or solicitors could often dig themselves into a hole of crippling debt to mitigate the sellers’ losses. After backing out of a deal because they were short $100,000.00 to close the deal, the buyer could be on the hooksfor not only the price difference between the original APS and the re-sale APS (likely far more than $100K but also reimburse the seller’s mortgage interest, property tax, and legal fees between the failed closing and re-sale.
Because of the binding nature of the APS, sellers are almost always entitled to be made whole from a buyer’s breach. In fact, even if the seller resold the property to someone else at a profit, the buyer would still forfeit the tens or hundreds of thousands of dollars of deposit to the seller, giving the seller a windfall from the buyer’s breach.
Under these difficult circumstances, the buyer’s litigation counsel could help the buyer alleviate or escape the crushing debt by attacking the seller’s mitigation efforts and attempting to frame the seller as the breaching party. Even if the buyer is clearly at fault, litigation counsel could still instill enough doubt and uncertainty in the case to push the seller into a more favourable settlement.