When real estate values sag, some buyers get severe buyer’s remorse. Some of them, rightly or wrongly, repudiate the purchase, refusing to close. I call them “runaway buyers.” When runaway buyers register a caution they should expect the court to remove the caution and order costs against them.
On Friday, Feb 2/18, the article “I Want My Deposit Back” appeared in The Globe And Mail (Ontario Edition). It discusses a case of mine where a real estate buyer backed out of the purchase, refusing to close. The buyer then, because of the deposit, registered a caution against title to the sellers’ land.
I went to court for an Order to remove the caution from title. The judge decided that the buyer should never have registered the caution. There was no proper basis for the caution. It was for an improper purpose – to gain leverage in the dispute about the deposit.
The judge ordered the buyer to pay costs on a substantial indemnity scale to compensate the sellers for their legal expense in going to court for the Order to remove the caution.
Note that the judge did not rule on whether the buyer had a good basis for repudiation. That issue is for another day.
Other buyers also recently got the idea of registering a caution to press for return of the deposit. If this is a trend it is a bad one.
Globe subscribers can read the article online: https://www.theglobeandmail.com/real-estate/toronto/backing-out-of-a-real-estate-deal-a-cautionary-tale-against-strong-arm-tactics/article37801532/