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Help! My House Sale Fell Through

Help! My House Sale Fell Through


Mann Lawyers

Posted November 26, 2021

You’ve found yourself in a very unfortunate situation – the buyer of your house has decided to back out of the transaction and has left you in a bind. While fairly rare, this situation has become more common in the COVID era with a hot seller’s market pressuring buyers to bid beyond their means and then failing to secure financing. Other circumstances may also cause a buyer to re-think their decision such as personal life changes, buyer’s remorse, or a lower-than-expected appraisal. Regardless of the buyer’s reasons for not proceeding, here are some items to consider.

Mitigate Damages

In general, as the seller, the key is to mitigate your damages. Usually this means re-listing your property as soon as possible and making a good faith effort to sell the property. If you end up in court, you want to be able to tell a judge that you took all reasonable steps to lessen your losses. If a judge sees you as acting reasonably, they are more likely to rule in your favour.

Once your house is re-sold, you will be able to assess the losses incurred as a result of the first buyer failing to complete the transaction. If you are only able to re-sell your home for a lower price, the difference in purchase price will form part of your damages.

Document All Costs

While the difference in purchase price is often the largest part of your damages, make sure to document all additional costs resulting from the aborted transaction as well. These costs could include, but are not limited to: storage costs, mortgage interest, property taxes, utility costs, additional real estate commission, condo fees, and property insurance. If you were relying on the sale of this home to purchase a new home, any costs related to delaying that closing or being forced to take out a bridge loan to complete your purchase should also be included.

Once you and your real estate lawyer have calculated the damages, you will need to decide whether you wish to pursue a claim against the buyer to recover your losses. Your lawyer will be able to explain the different options to you at that time.

What Happens to the Deposit?

The deposit that the buyer paid when entering into the Agreement of Purchase and Sale will be held by your realtor pending a resolution. The deposit cannot be released without written consent from both the buyer and the seller, or a court order.

If your buyer drops out of the transaction and offers to sign a mutual release allowing you to have the deposit, we suggest speaking with your lawyer before agreeing to sign. After signing  the mutual release, neither party can sue the other with regard to the aborted transaction. If you are not yet aware of your total losses, you may wish to determine those before giving up your right to sue.

Ultimately, when all is said and done, the seller should be in the same position that they would have been in if the transaction had gone through.

The above is a general guideline for considerations in a failed sale transaction. If you find yourself in this scenario, it will be important to discuss your specific situation with your real estate lawyer to determine the proper course of action for you.

This blog post was written by Colleen Rhodes, a member of the Real Estate team.  She can be reached at 613-369-0369 or at

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