When a Home Buyer Cannot Close: What Ontario Buyers and Sellers Need to Know

What happens if a buyer signs an agreement to buy a home but cannot complete the purchase?

Many people think the buyer will simply lose their deposit and the deal will end. That is not always true.

The buyer may have to pay much more.

In Rosehaven Homes Limited v Jamil, 2026 ONCA 446, the Ontario Court of Appeal looked at what happens when a buyer cannot close and the seller later sells the property for less money.

The Court confirmed an important rule. If a buyer does not close, the seller must make a reasonable effort to sell the property again. If the seller does this properly and the property sells for less, the first buyer may have to pay the difference.

This case is an important reminder for anyone buying or selling real estate in Ontario.‍ ‍

The Main Rule: The Buyer May Have to Pay the Seller’s Loss

‍An Agreement of Purchase and Sale is a legal contract.‍ Once the agreement becomes firm, both sides are expected to complete the deal.

If the buyer does not close, the seller must take reasonable steps to limit the amount of money they lose. This will often mean putting the property back on the market and trying to find another buyer.

If the property later sells for less money, the first buyer may be responsible for the difference. For example, imagine a buyer agrees to pay $900,000 for a home but does not close. The seller puts the home back on the market and later sells it for $800,000. The seller has lost $100,000 on the sale.‍

The first buyer could be responsible for that $100,000 loss. There may also be other costs, interest, and legal fees. Losing the deposit may only be part of the problem.

The Rosehaven Case: The Buyer Did Not Have the Money to Close‍ ‍

The Rosehaven case started with a real estate deal that did not go as planned.

Salman Jamil had agreed to buy a property from Rosehaven Homes. When it came time to complete the purchase, he did not have the money needed to close.‍ ‍

That left Rosehaven with a property it had expected to sell. Rosehaven then sold the property to another buyer. The second sale became very important because Rosehaven claimed it had lost money when the first deal with Jamil fell through.

The dispute eventually went to court. The question was not whether the failed closing had caused a loss. One of the key questions was how that loss should be calculated.‍ ‍

The lower court awarded Rosehaven $36,053.02 in damages. Rosehaven believed the amount was too low and appealed.

The Ontario Court of Appeal agreed with Rosehaven. It found that the lower court had not used the right approach when calculating the loss.

There was no evidence that Rosehaven had acted unreasonably when trying to sell the property again. There was also no evidence showing that Rosehaven had sold it for an unfairly low price.

This mattered because the Court said the actual second sale was strong evidence of what the property was worth at that time.

The buyer could have challenged that second sale. For example, he could have tried to show that Rosehaven rushed the sale, did not market the property properly, or accepted a price that was too low. But there was not enough evidence to prove any of those things.

The Court therefore used the actual resale price to calculate Rosehaven’s loss. ‍ ‍Rosehaven’s damages were increased from $36,053.02 to $69,761.09.

The Court also increased the interest award from $22,639.32 to $43,806.14, based on an interest rate of 12 percent per year.

Jamil had already paid the amount ordered by the lower court. After the appeal, he still had to pay another $54,874.89, plus $8,000 in appeal costs.

The case shows how a problem that starts with not having enough money to close can turn into a much larger financial problem.

Why the Seller Won

The Actual Resale Price Was Important

The Court looked at earlier Ontario cases and confirmed a simple approach.

If a seller properly puts the property back on the market and sells it to a new, unrelated buyer, the new sale price can be used to show how much money the seller lost.

The seller does not always need to hire an expert to give an opinion about what the property was worth. The actual sale can be strong evidence of the property’s value.

The Buyer Needed Evidence

A buyer can argue that the seller did not handle the second sale properly.

For example, the buyer might argue that the seller accepted a very low offer when better offers were available. But the buyer needs evidence.

It is usually not enough to simply say that the property should have sold for more. A court may look at questions such as:

●       Was the property properly listed for sale?

●       How long was it on the market?

●       Did the seller receive other offers?

●       Did the seller turn down better offers?

●       Was the asking price reasonable?

●       Did the seller sell the property too quickly?

●       Was the new buyer independent from the seller?

In Rosehaven, the buyer did not provide enough evidence to show that the seller had handled the resale poorly.‍

That was a major problem for the buyer.

Losing Your Deposit May Not Be the End of It

This may be the most important lesson for buyers.

Some buyers believe that if they cannot close, their only risk is losing the deposit. That can be a very costly mistake.

Depending on the agreement and the facts of the case, a buyer who does not close may have to pay for:

●       the difference between the first sale price and the later sale price;

●       interest;

●       some of the seller’s extra costs;

●       legal costs; and

●       other losses caused by the failed closing.

The numbers can become large very quickly.

Rosehaven is a good example. The Court increased both the amount of damages and the amount of interest owed by the buyer.

What Buyers Should Know Before Signing

Buying a home is one of the largest financial commitments most people will ever make.

Before signing a firm agreement, buyers should be confident that they can complete the purchase. Buyers should pay close attention to:

●       whether the agreement depends on getting financing;

●       when the deposit must be paid;

●       what happens to the deposit if the buyer does not close;

●       whether interest will be charged if the buyer breaks the agreement;

●       whether the closing date can be extended; and

●       what other costs the seller may claim if the deal fails.

A buyer should not remove a financing condition simply because they expect their mortgage to be approved.

A mortgage preapproval does not always mean the lender will provide the money on closing.

What If You Think You Cannot Close?

Do not wait until closing day to deal with the problem. Speak with your lawyer as soon as you believe there may be an issue.

Depending on the situation, there may still be options.

The buyer may be able to ask for more time, find another source of financing, or work out another solution with the seller.

There is no guarantee that the seller will agree. However, dealing with the problem early may give both sides more choices.

Waiting until the last minute can make the situation much worse.

What Sellers Should Do When a Buyer Does Not Close

Sellers also need to be careful.

A seller cannot simply let the property sit empty and expect the first buyer to pay for every loss.

The seller should make a reasonable effort to sell the property again.

It is also important to keep good records. Sellers should keep documents showing:

●       when the property was listed again;

●       the listing price;

●       changes to the asking price;

●       how long the property was on the market;

●       offers that were received;

●       advice received from the real estate agent; and

●       the final sale to the new buyer.

These records can become very important if there is a lawsuit later.

The goal is simple. A seller should be able to show that they made a fair and reasonable effort to sell the property again.

The Interest Clause Can Be Expensive

Rosehaven also shows why buyers should pay attention to the interest section of the purchase agreement.

In this case, interest was calculated at 12 percent per year. That helped increase the interest award to more than $43,000.

A buyer may focus on the purchase price and deposit when signing an agreement. But the sections dealing with what happens if the deal fails can become very important.

Ask your lawyer to explain these sections before you sign or before you remove important conditions.

What This Case Means for Ontario Buyers and Sellers

Rosehaven sends a clear message. A firm real estate agreement should be taken seriously.

If a buyer does not close and the seller later sells the property for less, the buyer may have to pay the difference. The buyer may also face interest, legal costs, and other expenses.

At the same time, sellers must act reasonably. They should make a real effort to sell the property again and should keep records showing what they did.

For both buyers and sellers, getting legal advice early can make a major difference.

Conclusion

Rosehaven Homes Limited v Jamil is an important reminder that a failed real estate closing can become very expensive.

For buyers, losing the deposit may not be the end of the matter. If the property later sells for less, the buyer may also have to pay some or all of the seller’s loss.

For sellers, the case shows the importance of putting the property back on the market in a reasonable way and keeping clear records of the resale process.

If you are worried that a real estate deal may not close, speak with a lawyer as soon as possible. The earlier the problem is addressed, the more options you may have.