Legal Blog: Real Estate

House Inspection

Miller Desjardins v JF Lajoie Construction Inc. 2025 Ont SCJ

A house inspector missed obvious patent defects, resulting in the purchasers having problematic foundation, roof, and some windows and doors. The judge held that there was no breach of contract because the purchasers’ real estate agent retained the inspector and paid his $425 fee. Although we do not agree with this finding, it does not matter; the judge held that the inspector breached his duty of care in tort to the purchasers and awarded damages of approximately $68,000.

Breach of Contract (Real Estate)

Major Weston Homes Ltd v. Li 2025 Ont SCJ

Developer’s standard form agreement included a clause that stated that the purchaser had to retain a lawyer at least 30 days before closing and, if the purchaser did not, the purchaser waived tender and was in breach of the contract. The judge enforced this provision and held that the purchaser was in breach of contract. The judge refused to allow interest on the damages at 20% per year, even though it was set out in the agreement. The judge relied on a previous decision that stated that a “surprisingly onerous interest rate” had to be brought to the purchaser’s attention.

Damages (Real Estate)

Baldwin v. Williams 2025 Ont SCJ

Purchasers breached an agreement of purchase and sale because they could not get financing after the property had fallen in value. The vendors resold the property for a loss. The court noted that the duty to mitigate only requires the plaintiff to take reasonable steps, not all possible steps, to reduce its loss. The court ordered damages for the difference in the two sale prices and extra costs that the vendor’s incurred as a result of owning the property from the date of the original closing to the date of the final closing of the resale.

Encroachment

Bachli v. McLeod 2025 Ont SCJ

Defendant’s retaining wall encroached on his neighbour’s property. Predecessors in title had entered into an encroachment agreement that allowed the encroachment for 21 years. The agreement had expired and the new neighbour wanted the encroachment gone. The court noted that the parties had not negotiated an extension or a new agreement and granted a declaration that the retaining wall was encroaching on the neighbour’s land.

Lawyer and Non-Client

Furney v. Hazan and Chhina 2025 Ont CA

Plaintiffs claimed that a mortgage broker improperly instructed its lawyer to register a collateral mortgage without plaintiffs’ consent and that the lawyer registered the collateral mortgage to block plaintiffs’ mortgage financing and was involved in the improper removal of funds from his trust account. Plaintiffs also alleged that another entity, other than the lender, was somehow involved. The Court of Appeal dismissed the action against the other entity because it was not the lender and plaintiffs pleaded nothing to demonstrate its involvement. The Court allowed the action against the lawyer to continue, even though the lawyer was not plaintiffs’ lawyer, because plaintiffs had alleged that lawyer had participated in a fraud and merely following his client’s instructions did not insulate him from liability.

Mistake

Espartel Investments Limited v. MTCC 993 2024 Ont CA

Condo corporation had been paying inflated invoices relating to shared electricity since 2006. Its consultant caught the invoicing mistake in 2017 after the condo had paid $730,000 too much. The defendant argued that the condo should have caught the overcharge earlier such that most of it was statute barred. The trial judge held that it was not actually apparent and that a reasonable defendant would not have caught the mistake. The Court of Appeal upheld the decision. The court noted that the fact that the errors were capable of being discovered did not necessarily start the limitations clock. The test is reasonable discoverability, not the mere possibility of discovery. The court ordered the return of the funds, based on unjust enrichment.

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Honest Performance Breach

Bhatnager v. Cresco Labs Inc. 2023 Ont CA

The vendor claimed that the purchaser ought to have informed the vendor of an after-closing occurrence that would have affected the vendor’s entitlement to a post-closing adjustment. Motion judge agreed, but held that purchaser suffered no damages because the evidence showed that, knowing about the problem or not, the purchaser could have done nothing about it. The Court of Appeal dismissed the appeal and stated that a breach of a duty of honest performance (per the SCC in Callow) does not presume a claimant’s damages; the claimant must still prove that there was a lost opportunity that had monetary adverse effects. The Court also held that, on the evidence, that there actually was no breach – because the vendor had told the purchaser of the problem on a timely basis.

Liability for Caution

225753 Ontario Inc. v. Mifsud and Hunt, 2023 Ont SCJ

Mortgagee was selling a property in the exercise of its power of sale. Lawyer acted for a person who was not the owner of the property, but seemingly had some other claim to the property. Lawyer registered a caution. Mortgagee alleged that the caution prevented the mortgagee from closing its sale of the property and sued the lawyer and the claimant under s. 132 of the Land Titles Act. That section makes a person who registers a caution without reasonable cause liable for any damages the caution causes. The judge held that “person” in the section was a claimant, not the lawyer who registers a caution on behalf of a client.

Solicitor-Client Privilege

1824120 Ontario Limited v. Matich 2023 Ont SCJ (Div Ct)

Agreement of purchase and sale had a clause stating that the agreement was conditional on the seller’s lawyer approving the agreement’s terms. The lawyer gave an opinion to the sellers; they refused to waive the condition and the agreement failed. The buyer sued, alleging that the sellers did not exercise the clause reasonably, honestly, and in good faith. The sellers denied the allegations. The buyers then requested the lawyer’s file and opinion letter, arguing that the sellers had impliedly waived privilege. The court refused to grant access to the opinion. The sellers had specifically stated that they did not waive privilege. The court held that the buyer could not allege bad faith and, when the sellers denied the allegation, state that the sellers had waived privilege. The court refused to intervene, even after the buyers alleged that the lawyer did not approve the terms because the seller had received a higher price. The court interpreted the condition and held that nothing in the condition precluded the lawyer from reviewing non-legal terms of the agreement.

Solicitor’s Negligence

Miao v. Bhatia 2022 Ont SCJ

Purchaser retained a lawyer to get him out of a real estate deal. The lawyer tried, but failed, and the deal did not close. The vendor sued and the purchaser, through another lawyer, ultimately settled for $135,000. The judge held that the lawyer never guaranteed success in his negotiations and that he warned the purchaser that his chances of success were low. Further, the lawyer had notes to prove what he had advised. The judge held that the purchaser never had a guarantee of success if he did not close and should have closed. Further, even if the lawyer were negligent, ultimately the purchaser paid less in damages for not closing than he would have paid had he closed.