A recent decision of the Ontario Superior Court of Justice serves as an important reminder for buyers, sellers, and their realtors about the need for clarity and precision in real estate transactions.
The case involved an unconditional offer made by buyers to purchase a property in Kitchener. The offer included the usual Schedule A and was accepted by the sellers the following day. However, when the sellers accepted the offer, they made a change on the first page to indicate that the agreement was now subject to a new Schedule B, which they attached to the accepted offer.
As many of you know, Schedule B is commonly attached to Agreements of Purchase and Sale and typically includes standard clauses—such as how keys are to be released, how a business day is defined, and various banking and administrative provisions. In this instance, the seller’s Schedule B also included several miscellaneous clauses.
The sellers’ agent asked the buyers’ agent to have the buyers initial both the change referencing the new schedule and the Schedule B itself. The buyers did not do so and, in fact, changed their minds and decided not to proceed with the purchase. This was communicated to the sellers’ agent the following day. Notably, the buyers also never paid the required $50,000 deposit. The sellers subsequently re-listed the property and sold it for $25,000 less than the original price.
The sellers then sued the buyers for the unpaid deposit. The key issue before the court was whether there was a binding Agreement of Purchase and Sale when the sellers accepted the offer but added Schedule B—or whether that addition constituted a counter-offer that was never accepted by the buyers. The sellers argued that there was a valid and binding agreement; the buyers maintained that no binding contract ever existed.
After reviewing the evidence, the court agreed with the buyers. By adding the new Schedule B and requesting the buyers’ initials, the sellers had effectively made a counter-offer that was never accepted. The court noted that if the sellers had accepted the offer as originally written, there would have been a binding contract. However, by altering the offer, the sellers prevented a firm agreement from being formed. As a result, the sellers not only lost $25,000 on resale but were also responsible for their own legal fees and a portion of the buyers’ costs.
The lesson is clear: Any modification to an offer—such as adding or changing a schedule—must be signed and accepted by all parties. Failing to do so can mean that no contract exists, leaving one party free to walk away. In this case, the buyers were able to do exactly that because the sellers’ change amounted to a counter-offer that was never accepted.