When entering into an Agreement of Purchase and Sale (APS) for a property, buyers and sellers must remain cognizant of the precise language used and conditions they need to follow for an offer to be binding. If they neglect to do so, they run the risk of seeing their purchase or sale voided because they failed to meet certain obligations. This was the case in the recent decision of Feynes v Nellipudi, 2021 ONSC 3913.

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On March 23, 2021, the buyers (the Nellipudis) and the sellers (the Feynes) entered into an APS for a $2.5-million property in Coboconk, Ont. The terms of the APS stated that the buyers would pay a $100,000 deposit to Kawartha Waterfront Realty, the real estate company representing both parties in a multiple representation agency.

The APS contained two conditions in favour of the buyers: (1) a satisfactory home inspection and (2) obtaining a mortgage. The APS was conditional until the end of business on April 2, 2021 (10 calendar days). If the 10 calendar days passed without written notice or waiver, the offer was then considered null and void and the deposit would be returned to the buyers.

The buyers paid the real estate company the deposit and the two parties subsequently commenced further email negotiations, which culminated in the buyers sending over an amendment deleting the inspection and mortgage conditions and adding in clauses about furniture removal and work to be completed prior to closing. The amendment was delivered to the sellers on April 2 and was to be accepted by 11:59 p.m. that day. The sellers refused to sign it.

On April 3, at 9:01 a.m., the real estate agent (who acted for both the buyer and seller) emailed the sellers telling them the buyers decided not to improve the terms of the APS. Later that day, the sellers entered into a second APS with a different set of buyers, which did not contain any conditions. The sellers then sent a Mutual Release to the buyers so that their deposit could be returned. The buyers refused to sign it. Instead, they maintained that there was a legally enforceable APS and that the unsigned amendment constituted a waiver of the conditions or notification for the purposes of the 10-day period. They also claimed that the sellers violated their duty to act in good faith.

The sellers took the position that the buyers failed to waive or fulfil the conditions within the 10-day period and the APS was therefore null and void as of April 2. They claimed the proposed amendment was not a waiver or notification of fulfilment because they did not agree to the terms and did not sign it. They also maintained that they not only acted in good faith, but when they did not sign the amendment, they gave the buyers an opportunity to revise the proposed amendment in order to rectify the problem but they did not do so by the following morning. The buyers later registered a Notice of a Purchaser’s Lien on the title of the property.

The court had to address three issues: 1) whether there was a valid legally binding APS, 2) whether the Purchaser’s Lien should be discharged and 3) whether the sellers had breached a duty to act in good faith.

Regarding the first issue, Justice Sutherland found that there was a clear, unambiguous and binding written APS between the parties, which was executed and fully accepted on March 23.  There was no question that the two conditions about the home inspection and mortgage were for the benefit of the buyers and were required to be confirmed or waived by April 2.

While there were several emails back and forth between the two parties about additional conditions as part of the APS, none of these emails amounted to a new APS and waived the old one. Justice Sutherland found that the buyers were hedging their bets that the sellers would accept the terms of the proposed amendment as it was set to expire one minute before the expiry of the APS conditions. However, since the sellers did not sign the proposed amendment and the buyers did not provide written notice regarding the conditions of the original APS, it then became null and void.

Justice Sutherland clarified that an agreement requiring the signatures of all parties, such as the amendment, did not constitute a waiver, but instead simply represented an offer to amend the agreement, which required the acceptance of all parties concerned. Additionally, the buyers had it within their power to send the required written notification and subsequently request the proposed terms of the amendment. By not proceeding in this manner, the buyers demonstrated they did not want to be bound by the terms of the APS whether the sellers accepted the terms of the proposed amendment or not.

Justice Sutherland further noted that in accordance with precedent, evidence was needed to determine whether the buyers had the intent and ability to close the transaction. They had not provided any evidence in this regard. Taken all together, this meant that the APS was null and void and the buyers no longer had an interest in the property as of April 3 at 12:00 a.m.

Regarding the second issue, because the buyers no longer had an interest in the property, the Purchaser’s Lien was to be discharged and deleted from the property title. Regarding the third issue, Justice Sutherland found that there was no evidence indicating that the sellers acted dishonestly, and the buyers had the onus of waiving the terms and conditions of the APS but chose not to do so. If the court were to find that the sellers breached their duty of good faith, it would confer an “unbargained benefit” to the sellers outside the terms of the APS. The buyers were unable to purchase the property in the eyes of the court and their $100,000 deposit was returned to them since the APS was null and void.

In sum, attention to and communication regarding the conditions of an APS are of the utmost importance when working with such agreements. Parties need to be mindful of expiration periods for conditional offers and remember that any new agreements or additions they wish to make are signed and agreed upon in writing by both parties. If a seller is not prepared to amend an agreement during the conditional period, the buyer has to decide whether he/she wants to proceed with the agreement (and property) as is and potentially try to negotiate for changes later, all the while being fully aware that the seller may not agree to any further amendments. If that risk is too great for the buyer, he/she may wish to consider walking away from the transaction and getting back their deposit.

Final thought – a proposed amendment deleting conditions in an APS does not constitute waiver of those conditions nor is it notice of fulfilment of the condition(s).


Maya Koparkar is a second-year student at the University of Windsor, Faculty of Law. She is currently summering at Boghosian + Allen LLP. In conjunction with her studies, she has worked at Legal Aid of Windsor, and is a mentor as part of the Peer Mentorship Program and a contributing writer to the student newspaper Headnotes. Prior to law school she worked in public affairs in Washington, D.C. She holds Bachelor of Arts from McGill University in International Development Studies, where she graduated with honours.

19 COMMENTS

  1. Interesting scenario. My thinking is that the Listing Agent/Broker was taking instructions from buyers who were being difficult, wanting to do things ‘their way’, buyers ended up playing themselves without knowing or listening to advice of Listing Agent. We’ve all been in a situation with buyers and/or sellers who simply don’t want anyone’s advice.

  2. I suspect the Agent was representing both parties (Buyers and Sellers) on both deals otherwise he would have made sure the first deal was handled properly…..or….the Agent is totally incompetent!

  3. Shaneka and Maya,
    Do you know of any case law or examples you can speak to, where an offer to amend is made before the time conditions expire, with an irrevocable time that is after conditions expire, and is subsequently agreed to by the other party after the time conditions expire? This obviously means both parties are willing to proceed in this case I realize. Is the agreement “resurrected” legally given both parties have agreed to the amendment (albeit after the fact)? Or for the agreement to be legally enforceable, does a whole new offer need to be signed once the conditions expire regardless of subsequent amendments? This is a question I have wondered more than a few times!
    Any thoughts or input you or others have is much appreciated.
    Jonathan

  4. A prime example of why “DUAL AGENCY” should be banned throughout Canada as opposed to only some provinces [i.e. BC]. The very same realtor/brokerage handling both sides [seller & buyer] and maintaining zero conflict of interests is akin to the very same Chartered Professional Accountant providing financial advise/guidance on a sale wherein he/she issued AUDITED FINANCIALS for both, the seller & buyer………..

    • We are sales people, we sell. If what you feel should be the way then Car dealerships should require you to bring your own sales rep and it should be mandatory for developers to to do the same.

      • The car salesperson analogy isn’t even a close comparison and has no business being mentioned. At all times the car salesperson is working solely to get the best deal for the dealership. At no time is the car salesperson in a conflict of interest between their employer – the dealership and the customer – the buyer.

  5. The buyers apparently did not realize how much they wanted this property until after it was being pulled away from them. They must have believed they had the sellers over a barrel, when in fact there was no barrel.

    So much for double-enders working both sides equally for all concerned. Nuance usually gets lost in emails…unless expletives are used. Winners by TKO…the sellers!

  6. Stuiped rich people are hilarious. There was no chance that they were going to win this lawsuit but instead of moving on, they doubled down, threw a hissy fit and filed for a lien on the property. I’m happy the courts resolved this issue quickly for the Sellers. Also the Realtor must have been new. Who waits until the last second like that for an amendment when the buyers are willing to firm up? Especially in this market. The buyers played themselves.

  7. You can take a running bluff with an amendment for price reduction and/or home repairs that also deletes conditions, but you better have that fully signed waiver in your back pocket so you can send it in to firm up the deal 30 minutes before condition expires, in case the sellers ghost or respond negatively to the amendment request, or are secretly holding a better backup offer hoping you me buyers won’t waive.

  8. If you fulfilled the conditions, always use an NOF. If you’re looking to do an amendment make sure it expires hours before the conditions expire so if you are willing to firm up without the fixes that you have the time to do so. I’m confused how the agent representing both parties did this deal and the next day sold it to someone else, or was it a FSBO.

    • Obvious error on the Buyer’s end for not completing the NOF but I, too, am confused about how a 2nd offer was brought to the attention of the Seller. Same brokerage? Was there no listing agreement binding the Seller to the brokerage to represent the Seller on offers? How did the realtor not know that a 2nd offer was in the wings?

    • Wow. Right. I hadn’t thought of that! Perhaps another offer came in right away after the condition removal date and time had passed and the listing Realtor had to deal with it. If there was a back up waiting in the wings not officially a back up and the listing Realtor knew about it, then . . . how could the listing Realtor double ending not have had a Notice signed removing conditions. How could that Realtor not have known that the amendment had to be signed well in advance and or conditions removed by the time required.

      Obviously, another Realtor was waiting to submit an offer if the first transaction didn’t go through and would likely have communicated that with the listing Realtor who then would have known about it prior to the time required to remove conditions.

      Perhaps the double ending Realtor was following the buyers’ instructions to play that last minute game – but, still, the Realtor had to know that if conditions weren’t removed then his double ended deal was dead and the Realtor in the background was going to submit an offer.

      Maybe the double ending Realtor threw up his hands and did what the buyers wanted at the last minute, but if conditions weren’t removed the deal was going to be dead – so, what was the point if there wasn’t enough time to remove conditions. So much happens at the last minute making much stressful. This must have been stressful, especially later when all went to court.

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