Canadian real estate legal practises are hard on buyers that fail to close the agreed upon real estate transaction. Almost certainly the buyer will lose the deposit and could also be potentially liable for a number of damages.

A series of various court decisions across Canada have proven this to be the case throughout the years, with the most recent decision of the Superior Court that can be found here which confirms same once again.

In the above case, the Plaintiffs failed to close their purchase of the real property after discovering a mismatch in the actual square footage of the house vs what was advertised on the MLS Listing (the square footage was accurate on the floor plans also provided to the purchasers but inaccurate on the MLS Listing).

The court examined the facts of the case and established that “the MLS listing gave all realtors access to: <…> a floor plan of the home with accurate dimensions for each room <…>” As such, it appears that the buyer had failed to do their own due diligence with resect to the square footage of the premises. The home’s area set out on the MLS listing, according to the Judge, did not amount to a material representation despite the discrepancy between same and the area accurately represented on the floor plans.

The Judge further stated that: “It is well-established that a material misrepresentation may be invoked to set aside an agreement:

 The equitable remedy of rescission is available for a false or misleading representation that induces a contract. Rescission requires proof that the misrepresentation was material and was relied on by the party seeking to rescind the contract. To be material, a misrepresentation must relate to a matter that would be considered by a reasonable person to be relevant to the decision to enter the agreement, but it need not be the sole inducement for acting. Whether a contracting party did in fact rely on the misrepresentation, at least in part, to enter into the agreement is a “question of fact to be inferred from all the circumstances of the case and evidence at trial.””

Further to the above, it can be concluded that the threshold to prove the material representation is quite high and will not be automatically established by the Court in each case of discrepancy or conflicting information.

The content provided is for informational purposes only and in not legal advice. Do not rely on this content to make legal or business decisions. Always seek professional legal advice relevant to your situation.