Your buyer does not want to proceed with a notarized deed – what you can do?
Selling a property in Quebec can become unexpectedly complicated when, after an accepted promise to purchase, the buyer refuses to proceed with the notarized deed of sale. A buyer may stop responding, fail to provide the required information to the notary, announce that they have changed their mind, or simply refuse to attend the scheduled signing.
For a seller, this can be particularly frustrating when the conditions of the promise to purchase have already been fulfilled and the transaction was expected to close.
However, a buyer’s refusal to proceed does not necessarily mean that the real estate transaction is automatically cancelled. In Quebec, an accepted promise to purchase can create binding obligations for both the buyer and the seller. The appropriate response therefore depends on the terms of the agreement and the reason why the buyer refuses to complete the purchase.
Can a buyer simply change their mind before the notarized deed of sale?
Generally, a buyer cannot assume that they are free to walk away from a property purchase simply because the notarized deed of sale has not yet been signed.
An accepted promise to purchase is an important contractual commitment. Once accepted, and subject to the conditions contained in it, it may bind the buyer to purchase the property and the seller to sell it. In a typical Quebec residential transaction, once the promise to purchase has been accepted and its conditions have been fulfilled, the parties proceed to the notary to complete the transaction and sign the deed of sale.
This means there is an important distinction between having a valid contractual reason not to proceed and simply no longer wanting to purchase the property.
A buyer’s personal circumstances may change. The buyer may find another property, reconsider the purchase price, become concerned about future expenses, experience a change in their personal situation or simply regret the decision. These circumstances do not necessarily release the buyer from an existing contractual commitment.
First determine why the buyer refuses to proceed
Before deciding what action to take, the seller should determine the precise reason for the buyer’s refusal.
Not every failure to sign a deed of sale constitutes an unjustified refusal. A promise to purchase may contain conditions relating to matters such as financing, inspection, examination of documents, or other aspects of the transaction. Issues affecting the property or its title may also arise before the deed of sale is signed. Depending on the agreement and circumstances, these issues can affect whether the buyer remains required to complete the transaction.
The seller should therefore review the complete transaction rather than treating the buyer’s refusal as an isolated event. Relevant documents may include:
- the promise to purchase and any counter-proposals;
- amendments and annexes;
- financing-related documents;
- inspection-related notices;
- the seller’s declarations;
- correspondence between the parties or their brokers;
- communications from the notary; and
- any written explanation given by the buyer for refusing to proceed.
The central question is whether the buyer has a contractual basis for refusing to complete the purchase or is simply refusing to perform an obligation that remains binding.
What happens if the buyer does not show up at the notary?
Failing to attend the appointment with the notary does not, by itself, necessarily cancel the transaction.
The notary plays a central role in completing a Quebec real estate sale, including preparing the deed of sale and verifying matters relating to the property’s title. When a buyer does not attend the scheduled appointment, the reasons for the absence must be investigated. If the buyer simply no longer wishes to purchase, remedies may be available to the seller.
Accordingly, a seller should avoid immediately assuming that the property can simply be sold to someone else.
The legal status of the existing transaction should first be clarified.
Put the buyer’s refusal in writing
When a buyer indicates that they will not proceed with the notarized deed, it is generally important to create a clear written record.
If the refusal was communicated verbally, written confirmation can help establish the buyer’s position. Depending on the circumstances, a formal written demand may then be appropriate.
Such a demand can identify the accepted promise to purchase, state that the seller considers the agreement binding, request that the buyer comply with their obligations, and establish a reasonable deadline for the buyer to confirm that they will proceed with the transaction.
Creating this written record can become particularly important if the dispute later concerns whether the buyer actually refused to purchase, whether the seller remained ready to complete the sale, and what losses resulted from the failed transaction.
Can the seller force the buyer to purchase the property?
In certain circumstances, a seller may seek to require the buyer to complete the transaction rather than simply accept the buyer’s refusal.
Whether that remedy is realistically available depends heavily on the wording of the promise to purchase, whether its conditions were fulfilled or waived, whether the seller was himself in a position to complete the transaction, and the reason advanced by the buyer for refusing to sign.
This type of remedy should not be viewed as automatic. A dispute over the completion of a real estate sale can involve questions about the parties’ respective contractual obligations, the condition of the property, financing, title issues and the conduct of both parties.
Timing can also become important. A seller faced with a buyer who refuses to proceed should therefore avoid unnecessary delay in determining what position to take.
Can the seller claim financial damages instead?
Depending on the circumstances, the seller may instead seek compensation for losses caused by the buyer’s unjustified failure to complete the purchase.
A failed real estate transaction can generate significant financial consequences. For example, the property may have to be resold for less than the price originally agreed upon. The seller may also incur additional expenses because the property remains unsold for longer than anticipated.
Potential losses may include, depending on the particular situation:
- a difference between the original sale price and the eventual resale price;
- additional hypothec or financing costs;
- municipal and school taxes incurred during the additional ownership period;
- condominium expenses;
- insurance costs;
- maintenance and carrying costs;
- expenses associated with putting the property back on the market; and
- other losses directly connected with the buyer’s failure to complete the transaction.
The existence and amount of recoverable damages will depend on the circumstances and evidence. Compensation is not automatic simply because the buyer refused to sign. The seller must be able to establish the loss claimed and its connection with the failed transaction.
A buyer’s failure to sign the deed of sale through their own fault can have financial consequences and potentially lead to claims for damages.
Be careful before accepting another buyer
One of the most important practical issues arises when the seller wants to put the property immediately back on the market.
That reaction is understandable, particularly where another potential buyer is available. However, accepting a second transaction before determining the status of the first one can create additional complications.
The seller should first establish whether the original promise to purchase remains binding, whether it has validly become ineffective or whether the seller intends to treat the buyer’s conduct as a breach and pursue another remedy.
Otherwise, the seller could potentially find themselves dealing with competing contractual obligations.
Keep evidence of every financial consequence
If the buyer’s refusal causes the transaction to collapse, careful record-keeping becomes essential.
The seller should preserve correspondence, notices, notarial communications and documents relating to the original transaction. If the property is placed back on the market, records concerning the new listing, subsequent offers, eventual resale price and additional expenses should also be retained.
Invoices, mortgage statements, tax statements, condominium statements, insurance documents and other proof of carrying costs may become relevant if financial compensation is eventually claimed.
The objective is to document both what happened and what financial consequences followed from the buyer’s refusal.
The promise to purchase remains the starting point
There is no single answer that applies every time a buyer refuses to proceed with a notarized deed of sale.
The starting point is always the agreement between the parties.
In Quebec real estate transactions, the promise to purchase normally establishes the property being purchased, the price, the applicable conditions, the parties’ obligations and the anticipated completion of the transaction before a notary. Once accepted, it can constitute a binding agreement between the buyer and seller.
Before taking action, it is therefore necessary to determine:
- whether the promise to purchase was validly accepted;
- whether its conditions were fulfilled, waived or otherwise resolved;
- why the buyer refuses to proceed;
- whether that reason is permitted under the agreement;
- whether the seller remains ready and able to complete the sale; and
- what remedy is most appropriate if the buyer is in default.
A buyer’s refusal to sign a notarized deed of sale does not necessarily terminate a Quebec real estate transaction.
Where an accepted promise to purchase remains binding and its conditions have been satisfied, a buyer who simply changes their mind may face legal and financial consequences. Depending on the circumstances, the seller may consider steps intended to have the transaction completed or may seek compensation for losses resulting from the failed sale.
The most important point is not to treat the buyer’s refusal as automatically cancelling the transaction. The promise to purchase, its conditions, the buyer’s stated reason for refusing and the seller’s own compliance with the agreement should all be examined before the property is resold or another course of action is taken.
This text provides general information about Quebec real estate transactions and is not legal advice. The rights and remedies available in a particular transaction depend on its facts and contractual documents.
This text is provided for legal information purposes only. If you have a specific question regarding your personal situation, please contact a lawyer.
Allen Madelin Avocats offer consultations both in person and via videoconference. The first consultation is offered for $125.For more information, please contact us by telephone: 1 514 904 4017 or by e-mail: [email protected].
