Seller Backing Out of a Home Sale in Ontario: What Buyers and Sellers Can Do

A seller who has second thoughts, a buyer who hears the seller wants out and a seller who is thinking of walking away all need the same answer first: where do I stand under the agreement? This article explains when a seller can lawfully end a deal, what a buyer can do if a seller backs out and what a seller risks. For the other side of the table, see our article on backing out of a home purchase in Ontario.

Is a Seller Bound by a Signed Agreement?

Yes. Once the buyer and seller have signed an agreement of purchase and sale, and its conditions are satisfied or waived, each side is bound to complete the deal on the closing date. The Statute of Frauds says an action on a contract for the sale of land needs the agreement, or a memorandum or note of it, to be in writing and signed by the person to be charged (section 4). The signed agreement of purchase and sale is that writing. For what it contains, see our guide to the agreement of purchase and sale.

When a Seller Can Lawfully End the Deal

• A condition for the seller’s benefit that is not satisfied. Some agreements include conditions that protect the seller. Whether the seller can end the deal depends on how the condition is worded, its deadline and what the agreement says about giving notice. Read those terms with a lawyer before you act, because a seller who ends a deal on a condition that was in fact satisfied or waived has no right to end it.
• A default by the buyer. If the buyer does not meet a deadline or does not close, the seller’s rights are different. When a purchaser repudiates the agreement and fails to close, the Court of Appeal for Ontario has said the deposit is forfeited without proof of the seller’s loss, subject to a court’s discretion to grant relief from forfeiture (Ching v. Pier 27 Toronto Inc., 2021 ONCA 551, paragraph 67). A seller should still get advice before treating the agreement as ended, because a mistake can turn the seller into the party in breach.
• A release the buyer agrees to sign. The buyer and seller can agree in writing to end the deal. A mutual release also says who receives the deposit. The buyer is not required to agree, and a release can give up more than the deposit.
• A way out written into the agreement. Read the agreement for any termination right and for how it must be used.

A higher price, a better offer, seller’s remorse or a change in plans are not on that list. Unless the agreement says otherwise, they do not give the seller a right to end the deal.

What Buyers Can Do if a Seller Backs Out

1. Keep everything: the agreement and its schedules, every amendment, notices about conditions, emails and texts, your mortgage approval and proof of funds.
2. Ask a lawyer to write to the seller and the seller’s lawyer, confirm that you are ready to close and ask the seller to confirm in writing that it will close.
3. Do not sign a release without advice. A release can end the deal and give up a claim for damages as well as the deposit.
4. Decide with your lawyer what you want: the property or compensation. See below.
5. If you start a court claim in which an interest in the land is in question, ask your lawyer about a certificate of pending litigation (see below).
6. Watch the time limit: a claim generally has to be started within two years (see below).

Specific Performance or Damages

A court that can order specific performance can also award damages in addition to it or in place of it (section 99 of the Courts of Justice Act). That gives a buyer two main paths: ask the court to order the seller to complete the sale, or claim money for the loss.

Specific performance is not automatic. In Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, the Supreme Court of Canada repeated what it said in Semelhago v. Paramadevan: it is no longer true that every piece of real estate is unique, it cannot be assumed that damages are an inadequate remedy in all cases, and specific performance is available only where money cannot compensate fully for the loss because of some peculiar and special value of the land to the buyer (paragraph 38). The facts were close to a seller backing out: the vendor failed to satisfy a condition and refused to extend the closing date, and the buyer sued for specific performance (paragraph 2).

The Court also said a buyer who sues for specific performance is still expected to take reasonable steps to limit its losses, and it held that the buyer in that case could not recover losses it could reasonably have avoided (paragraphs 6 and 37). A buyer deprived of an investment property has no justification for refusing to buy a substitute unless it can show the land has a peculiar and special value to it (paragraph 41). A buyer who wanted the home to live in may be in a different position from a buyer who bought to make a profit, so what you tell your lawyer about why this property mattered is important.

For how the court process works, see our article on suing for specific performance.

A Certificate of Pending Litigation

Under section 103 of the Courts of Justice Act, the start of a court proceeding in which an interest in land is in question is not notice to a person who is not a party until a certificate of pending litigation is issued by the court and registered. In plain terms, a certificate gives notice of the claim to anyone who later deals with the property. A party who registers one without a reasonable claim to an interest in the land is liable for damages caused by it (section 103(4)), and the court can discharge a certificate on grounds that include a claim for money in place of the land, no reasonable claim or the lack of reasonable diligence (section 103(6)). Get advice before you rely on one.

What Happens to the Deposit

The deposit is normally held in trust by a real estate brokerage. The Real Estate Council of Ontario (RECO) says that when a transaction fails and the buyer and seller cannot agree on the deposit, the brokerage can pay it out only under a mutual consent or release form signed by both, or under a court order. If a brokerage holds a deposit for two years without a determination, RECO says it is transferred to RECO, which can release it only the same way (see the RECO deposit insurance FAQ). A buyer should not assume the brokerage will return the money on request, even if the seller is the one who walked away.

If You Are the Seller and Want Out

1. Read the agreement first: any condition for your benefit, its deadline, the closing date and how notice must be given.
2. Speak with a lawyer before you send a notice, stop communicating, relist the property or sign a new agreement.
3. Understand the exposure. A seller who refuses to close without a right to do so may face a claim for specific performance or damages, and a certificate of pending litigation can give anyone who later deals with the property notice of the claim.
4. If you want out, ask your lawyer to propose a release in writing. The buyer does not have to agree, and may ask for compensation.
5. Keep records of the dates, the conditions and the messages exchanged.

Time Limits

Under the Limitations Act, 2002, a proceeding generally cannot be started after the second anniversary of the day the claim was discovered (section 4). A claim is discovered on the earlier of the day the person first knew of the loss, that an act or omission caused it, whose act or omission it was and that a proceeding would be appropriate, and the day a reasonable person in the same circumstances ought to have known (section 5). When the clock starts can be argued, so do not wait.

Frequently Asked Questions

Can a seller back out of an agreement of purchase and sale in Ontario?

Not without a right to do so. A signed agreement binds the seller as well as the buyer. A seller can end the deal only if the agreement or the law gives a way out, such as a condition for the seller’s benefit that is not satisfied as the agreement provides, a default by the buyer or a release the buyer agrees to sign.

Can a seller cancel a deal because they received a higher offer?

A higher offer is not a right to end the deal. Unless the agreement says otherwise, a seller who refuses to close because of a better offer may face a claim by the buyer.

What can I do if the seller backs out?

Keep your records, ask a lawyer to write to the seller confirming you are ready to close, do not sign a release without advice and decide whether you want the property or compensation. A claim generally has to be started within two years.

Can I force the seller to close?

A buyer can ask a court for specific performance, but it is not automatic. The Supreme Court of Canada has said specific performance is available only where money cannot compensate fully because of some peculiar and special value of the land to the buyer (Southcott Estates, 2012 SCC 51, paragraph 38). A court that can order it can also award damages instead or as well (Courts of Justice Act, section 99).

Can I get my deposit back if the seller backs out?

Not on your request alone. RECO says the brokerage can pay out the deposit only under a mutual consent or release signed by both the buyer and the seller, or under a court order.

Do I have to sign the seller’s release?

No. A release ends the deal and can give up your claims, including a claim for damages. Have a lawyer read it first. You may be able to negotiate compensation.

What is a certificate of pending litigation?

It is a certificate issued by the court and registered on title that gives notice of a court proceeding in which an interest in the land is in question (Courts of Justice Act, section 103). A party who registers one without a reasonable claim to an interest in the land is liable for damages.

How long do I have to sue a seller who backs out?

Generally two years from the day the claim was discovered, under sections 4 and 5 of the Limitations Act, 2002. Get advice early, because when the clock starts can be disputed.

Related: our articles on backing out of a home purchase, specific performance and a collapsed deal, our agreement of purchase and sale guide and our real estate litigation service.

Talk to a real estate lawyer about your property. Call (647) 696-8069 or book a free consultation. We serve clients in English, Hindi and Punjabi.

Legal Information, Not Legal Advice. This article is general information about a seller backing out of a home sale in Ontario, based on the Statute of Frauds, the Courts of Justice Act and the Limitations Act, 2002 as shown on Ontario.ca (currency date November 3, 2026), the Supreme Court of Canada’s decision in Southcott Estates, a decision of the Court of Appeal for Ontario and the Real Estate Council of Ontario’s deposit insurance FAQ, checked on November 6, 2026. Your agreement and your facts decide your rights, so speak with a real estate lawyer about your situation.