The 2025 Ontario Court of Appeal decision of Correa v. Valstar Homes (Oakville Sixth Line) Inc. (2025 ONCA 156), demonstrates that “time is of the essence” clauses will be strictly interpreted in real estate transactions in Ontario, even when a delay is as short as nine minutes.
Background
In 2020, the Purchasers entered into an Agreement of Purchase and Sale to purchase a newly built home in Oakville from a Builder which set a closing date of “no later than 5:00 p.m.” on January 27, 2021. The Agreement of Purchase and Sale also included a “time is of the essence” clause.
The Builder subsequently extended the closing date to April 20, 2021. On that day, the Purchasers had difficulty securing funds for the closing and requested a one-day extension of the closing date, which was refused by the Builder.
The Purchasers obtained alternative, private financing and deposited the money required for the closing into their lawyer’s bank account, who wired the money to the Builder’s lawyer. The wire transfer was sent by the Purchasers’ lawyer at 4:52 p.m.
However, as the money did not arrive until 5:09 p.m., the Builder terminated the Agreement of Purchase and Sale in reliance on the “time is of the essence” clause contained therein.
Afterwards, the Builder offered to “revive” the Agreement of Purchase and Sale with the Purchasers if they paid an additional $113,000.00 to the Builder as compensation for an increase in the value of the house since the Agreement of Purchase and Sale had been signed.
The Purchasers ultimately agreed to this additional amount and closed the transaction the next day.
The Motion
In 2022, the Purchasers commenced a claim in the Ontario Superior Court of Justice against the Builder for $130,000.00, in which they alleged that they had agreed to the Builder’s price increase under protest.
The Purchasers then brought a motion for summary judgment. In response the Builder argued that summary judgment should be granted in its favour, with the Purchasers’ action dismissed, though the Builder did not bring a summary judgment motion of its own.
In his decision, the Motion Judge ruled that the Builder was allowed to rely on the “time is of the essence clause” and was entitled to treat the Agreement of Purchase and Sale has having been terminated at 5:01 p.m. on the closing date.
The Motion Judge noted that while that finding may seem “harsh”, and while it was open to the Builder to have been more lenient with the Purchasers in light of their circumstances, he could not find that the Builder acted wrongly by “insisting on compliance with a contractual term to which the parties agreed” and he saw no reason
“to rewrite the parties’ bargain”.
Accordingly, the Motion Judge granted summary judgment in favour of the Builder and dismissed the Purchasers’ action.
The Motion Judge also ruled that the Builder did not impose any improper penalty as its offer to revive the Agreement of Purchase and Sale was part of an entirely new offer and contract.
Appeal to the Court of Appeal
The Purchasers appealed the Motion Judge’s decision to the Court of Appeal.
On appeal, the Ontario Court of Appeal upheld the decision of the Motion Judge and was not persuaded that the Motion Judge committed any reversible error in his analyses or conclusions.
Of note, the Court of Appeal’s decision referred to the fact that the firm deadline of 5:00 p.m. was reiterated in correspondence between the parties and was therefore not ambiguous.
Further, the Court of Appeal stated that it saw no error in the Motion Judge’s conclusion that the termination of the Agreement of Purchase and Sale by the Builder was not “unreasonable, unfair, or unjust”, and held that it was open to the Motion Judge to have concluded that a new contract had been entered into.
Takeaways
This decision is an important reminder for both purchasers and real estate lawyers that a “time is of the essence” clause is not a mere formality but instead is a strict condition that must be diligently followed. There is no “grace period” for minor delays, and a breach of contract is a breach of contract.
Given that, in this decision, a delay of only nine minutes provided sufficient grounds for termination by the Builder and ultimately cost the Purchasers an additional $113,000.00, this decision demonstrates the high threshold before there will be any intervention by the Court.
As such, purchasers and real estate lawyers should not assume that a Court will intervene to assist or relieve a party from significant consequences of a breach, even if there is only a trivial and immaterial delay.
Additionally, as the Builder’s lawyer received the funds at 5:09 p.m. despite the wire transfer being initiated by the Purchaser’s lawyer at 4:52 p.m., this decision underscores that the purchaser bears the risk of delay, and to avoid the risk of being in breach of contract, a purchaser should be diligent to ensure there is sufficient time.
Finally, this decision also illustrates that a seller does not have to be accommodating to a purchaser, and the decision by a seller to insist on a strict contractual deadline to be followed is not improper or bad faith conduct, nor is it improper after a termination for a seller to then seek to sell the house to a purchaser at an additional cost.
This blog post was written by Alex Bissonnette, Practice Lead of the Commercial Litigation team. Alex can be reached at 613-369-0358 or at [email protected].
