What Compensation am I Entitled to if my Purchase and Sale Agreement is Terminated in Nova Scotia?

/ Highlander Law Group/

Parties to a failed real estate transaction in nova scotia may be able to collect compensation from the party that breached the Purchase and Sale agreement.

For a variety of reasons, both the seller and the buyer are entitled to terminate a real estate purchase and sale agreement, including in rare cases after the agreement is firm (firm = all required conditions have already been met).

Timing Matters - Is the deal firm?

If you have received a signed termination notice,  you will no doubt want to know, ‘What am I entitled to as a result of the other party ending the agreement?” The answer usually depends on whether the agreement was terminated prior to the deal being ‘firm’ and whether there is a legitimate reason for termination.

Usually No Compensation if Terminated Prior to Condition Dates

If the other side is opting to terminate the agreement based on one of the conditions not being met prior to the condition date, then you are entitled to no compensation, and the damage deposit would be returned to the purchaser. Examples of this scenario would be if the buyer was not satisfied with the home inspection, a legal problem was discovered, such as a lien against the property or if the buyer could not obtain adequate financing.

After the Condition Dates It’s Breach of Contract

However, if the other side terminates the agreement after all of the conditions are met (including if they fail to close on closing day), then, if you have done nothing wrong, it would be considered Breach of Contract and you may be entitled to compensation.

 You’re Entitled to Compensation for Out of Pocket Costs

In that circumstance, the goal of the Nova Scotia justice system is to put you back in the same situation you would have been but for the other party breaching the contract. In general, that means, you would be entitled to be reimbursed for any money you are out of pocket as a result of the failed transaction. That could include such things as:

  • Legal fees that you paid towards the failed transaction;

  • Costs incurred for extended use of moving trucks or storage units;

  • Additional mortgage and/or insurance payments you would not have had to pay if the sale went through;

  • Property tax owing after the house should have closed;

  • For buyers, meals and/or temporary lodging required in the interim until a new house is purchased; and

  • For sellers, any loss between the agreed purchase price and the price the property ultimately sells for. 

    No Compensation if You Are Already in Breach

Keep in mind, the other party is entitled to terminate the deal (and you won’t be entitled to compensation) if they discover that you have already breached the agreement. This happens most frequently when the seller deliberately lies or misleads the buyer about the condition of the house. It can also happen if the house is no longer in the same condition it was on the date the buyer agreed to purchase it (for example, serious damage during move out, or the air conditioning no longer working). If the change is big enough and negotiations on how to compensate for the difference fail, then the buyer may be allowed to terminate the deal without having to compensate the seller.

Collecting What You’re Entitled To

It is important to understand that what you are legally entitled to is a different matter than actually collecting the compensation from the party that terminated the agreement.  Ideally, a figure can be agreed upon through negotiations with the other party’s lawyer.  However, Frequently the other party refuses to agree to any payment. In that circumstance, your only option is to sue them. 

Have questions for us?:

If you have any questions about a Real Estate transaction in Nova Scotia, you can call us at (902) 826-3070 or email us at info@highlanderlaw.ca to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $250+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain u

 

By: Dianna M. Rievaj, MBA, LLB - Founding Lawyer


The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. Nothing contained on this blog is legal advice or constitutes a legal opinion. While it is our goal to provide information which is current, legislative changes and court decisions, among other matters, may result in some information no longer being current or accurate. You should consult a lawyer before relying on any information. The views expressed herein by individual contributing lawyers posting entries to the blog are solely those of the authors and should not necessarily be attributed to or considered representative of the firm of Highlander Law Group Lawyers