Don’t Lose the Sale: Why Unresolved Work Orders Matter
Quick Highlights:
Quick Highlights:
- Ontario Superior Court ruled in favor of a buyer terminating a deal and recovering their deposit due to the seller’s failure to address work orders before closing.
- The court determined that the seller’s refusal to confirm compliance constituted a repudiation of the agreement.
- This case underscores the critical importance of professional representation in real estate transactions.
Navigating real estate transactions in Muskoka and Lake of Bays requires care and diligence, especially regarding outstanding work orders—official directives from regulatory bodies (such as municipalities or the Technical Standards and Safety Authority) that mandate property owners to correct safety issues, address compliance problems, or obtain proper permits for completed or ongoing work.
A recent Ontario case, Reel em Inn and Resort v. RNR Doemel Enterprises, clearly illustrates the potential risks of ignoring these critical obligations.
Case Overview: The dispute involved a picturesque 19-acre property near Whitefish Lake in Thunder Bay, complete with a seasonal store, cabins, and a fuel station. In February 2020, a buyer agreed to purchase the property for $389,900 and submitted a $50,000 deposit. Neither party engaged professional representation; instead, they used a standard Ontario Real Estate Association (OREA) Agreement with handwritten terms stipulating that the fuel tank be “painted/reconditioned by seller as per legal requirements.”
Shortly afterward, the buyer discovered nine outstanding work orders issued by the Technical Standards and Safety Authority (TSSA) dating back to June 2019. These work orders required retroactive permit applications, as the property’s underground fuel tank had been removed and replaced without authorization, carrying serious implications such as fines and potential suspension of operations.
Breakdown in Communication: Upon discovering these significant compliance issues, the buyer requested an amendment confirming the sellers would comply with the outstanding work orders by closing—or return their deposit. The sellers refused and then abruptly ceased communication prior to closing, ultimately causing the sale to fall through and leading to litigation over the deposit.
Court’s Determination: The Ontario Superior Court decisively ruled in the buyer’s favor, declaring that the sellers had fundamentally breached the Agreement of Purchase and Sale by failing to address compliance issues clearly identified through the work orders.
The judge emphasized that the sellers were fully aware they could not comply two weeks before closing and that their refusal to negotiate an amendment demonstrated a clear intention not to fulfill their contractual obligations. Thus, the buyer was justified in terminating the agreement and entitled to recover their deposit.
Lessons Learned: This landmark case reinforces the immense value of having experienced professional representation:
Partnering with knowledgeable, professional representation is the best strategy to protect your interests and ensure a smooth, successful transaction.
A recent Ontario case, Reel em Inn and Resort v. RNR Doemel Enterprises, clearly illustrates the potential risks of ignoring these critical obligations.
Case Overview: The dispute involved a picturesque 19-acre property near Whitefish Lake in Thunder Bay, complete with a seasonal store, cabins, and a fuel station. In February 2020, a buyer agreed to purchase the property for $389,900 and submitted a $50,000 deposit. Neither party engaged professional representation; instead, they used a standard Ontario Real Estate Association (OREA) Agreement with handwritten terms stipulating that the fuel tank be “painted/reconditioned by seller as per legal requirements.”
Shortly afterward, the buyer discovered nine outstanding work orders issued by the Technical Standards and Safety Authority (TSSA) dating back to June 2019. These work orders required retroactive permit applications, as the property’s underground fuel tank had been removed and replaced without authorization, carrying serious implications such as fines and potential suspension of operations.
Breakdown in Communication: Upon discovering these significant compliance issues, the buyer requested an amendment confirming the sellers would comply with the outstanding work orders by closing—or return their deposit. The sellers refused and then abruptly ceased communication prior to closing, ultimately causing the sale to fall through and leading to litigation over the deposit.
Court’s Determination: The Ontario Superior Court decisively ruled in the buyer’s favor, declaring that the sellers had fundamentally breached the Agreement of Purchase and Sale by failing to address compliance issues clearly identified through the work orders.
The judge emphasized that the sellers were fully aware they could not comply two weeks before closing and that their refusal to negotiate an amendment demonstrated a clear intention not to fulfill their contractual obligations. Thus, the buyer was justified in terminating the agreement and entitled to recover their deposit.
Lessons Learned: This landmark case reinforces the immense value of having experienced professional representation:
- For Sellers: Address outstanding work orders proactively and transparently to prevent last-minute deal collapses and potential litigation.
- For Buyers: Always verify regulatory compliance of any property to safeguard your investment and avoid unforeseen complications.
Partnering with knowledgeable, professional representation is the best strategy to protect your interests and ensure a smooth, successful transaction.
Source: Gardiner Roberts LLP – “Sellers Repudiated Agreement Of Purchase And Sale By Failing To Address Outstanding Work Orders (Reel Em Inn And Resort V. RNR Doemel Enterprises)” (mondaq.com)