When it comes to real estate, experience matters – it could actually cost you.
That’s the hard lesson a "top realtor"[1] learned when he tried (and failed) to walk away from a real estate deal after realizing the home he bought wasn’t quite as big as he thought. The Ontario courts weren’t having it, and in the end, he lost his $20,000 deposit and got slapped with $8,000 in legal costs. If that sounds like an expensive mistake, it could have been a lot worse (I will explain why in later posts)
The Deal Gone Wrong
Trial Court: No Sympathy for the "Top Realtor"
The Ontario Superior Court ruled in favour of the sellers, finding:
The court found that The Buyers breached the contract, and the deposit was forfeited to the sellers.
The Buyers Appealed[2]
The appeal was dismissed. The $20,000 deposit was forfeited to the sellers. Additionally, The Buyers were ordered to pay $8,000 in costs. Again, it could have been a lot worse for The Buyers; stay tuned.
The Takeaways:
The Deal Gone Wrong
An experienced realtor with over 2,000 deals closed and $1 billion in sales, should’ve known better.
A realtor and his wife (“The Buyers”) put in a firm, unconditional offer to purchase a home. The MLS listing stated the house was approximately 2,500 to 3,000 sq. ft. However, after signing the Agreement of Purchase and Sale (“APS”), he discovered the actual square footage was 2,155 sq. ft.—a difference of at least 345 sq. ft.
The Buyers refused to complete the real estate transaction and tried to back out, arguing that they had been misled about the size of the home.
They also demanded proof that a 1993 renovation was properly permitted. The sellers, having bought the home in 2009, didn’t have the original permit but confirmed the permit was closed via a municipal search.
Trial Court: No Sympathy for the "Top Realtor"
The Buyers sued for rescission (cancellation) of the deal and damages, but the sellers countered with a motion for summary judgment, seeking forfeiture of the $20,000 deposit.
The Ontario Superior Court ruled in favour of the sellers, finding:
- The misrepresentation wasn’t material – The Buyers personally inspected the home before purchasing. Courts expect people to use their own eyes, not just rely on an MLS listing.
- An experienced realtor should know better – The judge specifically called out Lamba’s real estate background, noting that a top realtor can’t claim to be misled about square footage when he walked through the house himself.
- The building permit issue was a non-starter – The Buyers never properly requisitioned the permit issue, and the court found the renovation had a closed permit anyway.
- The Buyers clearly still wanted the house – Emails from their lawyer showed they were trying to negotiate an extension, not outright cancel the deal.
The Buyers Appealed[2]
The Buyers weren’t done yet. They appealed, arguing that:
- The trial judge didn’t properly consider their evidence on mortgage financing and title insurance.
- The misrepresentation was material because square footage impacts mortgage approvals, insurance, and enjoyment of the home.
The Court didn’t buy it:
- The court agreed the MLS listing was misleading but ruled it didn’t matter because The Buyers viewed the house in person and clearly knew the layout.
- The Buyers’ emails contradicted their own case. If they really thought the square footage was a dealbreaker, why did their lawyer keep saying they were still trying to close?
- The building permit issue was dead on arrival—no valid requisition, no real title defect.
The appeal was dismissed. The $20,000 deposit was forfeited to the sellers. Additionally, The Buyers were ordered to pay $8,000 in costs. Again, it could have been a lot worse for The Buyers; stay tuned.
The Takeaways:
So, what can we learn from this?
- MLS Listings Are Not Contracts: The MLS listing is just marketing. Your contract (APS) is what matters. If square footage is that important, get it in writing or measure the house yourself before signing.
- You Can’t “Unsee” a House: Courts expect buyers to use their own judgment when inspecting a home. If you’ve walked through it, don’t expect to later claim, "I didn’t know how big it was."
- Real Estate Experience Can Work Against You: The “Top Realtor’s” expertise as a realtor backfired. The court essentially said, “You should’ve known better.” If you’re a real estate professional, expect a higher standard of scrutiny.
- Proper Requisitions Matter: If you have concerns about title, zoning, or permits, you must send a formal requisition before the deadline. Saying “I don’t feel comfortable closing” isn’t enough. This particular issue will come up a lot in future posts.
- Deposits Are Serious Business: A deposit isn’t just a nice placeholder. If you breach a real estate contract, expect to lose the deposit. Relief from forfeiture is rare, especially when the amount is reasonable relative to the purchase price. This will come up again in future posts.