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"Sellers' Remorse" No Justification for Reneging on House Deal — Specific Performance Granted

The sellers owned a 4300 sq ft home on a large lot. Wanting to consolidate and pay off their debts, they decided to sell and accepted the buyers' offer of $835,000. For the buyers, the home was ideal since it had the requirements they needed to accommodate their four-generation extended family. These included two master bedrooms, each with ensuite bath, and a main-floor bedroom suitable for their grandparents.

But just before closing, the sellers had "sellers' remorse". They reneged on the deal, believing that they could have obtained a higher price. The deal did not close. The buyers mitigated by finding a somewhat comparable home, but it cost more, had a smaller square-footage and lacked some of the crucial features they were looking for.

The buyers sued for a court declaration that the agreement was valid and binding. They claimed for specific performance or damages in the alternative.

The court ruled in the buyers' favour, and declared the agreement valid. On the evidence, the sellers had fully understood the terms of the agreement they had signed, including the $835,000 price and the binding nature of the contract.

However, an award of damages would be inadequate and uncollectable, given sellers' existing debt load. As the court put it: "Awarding damages would leave the [buyers] with a meaningless remedy."

Instead, the court ordered specific performance. It explained that when crafting a remedy for breach of contract, it strives to place the injured parties in the position they would have been in, had the contract been performed. From the buyers' perspective, the house had particular significance to them, with its ideal features to accommodate their extended family's needs. This made it "unique" in the legal sense, when viewed in the context of their specific requirements.

The court ordered the sellers to vacate within 120 days, and imposed hefty legal costs amounting to $200,000, to be deducted from the home’s purchase price. The sellers' later appeal, requesting a stay of the proceedings, was dismissed in the interests of justice by the Court of Appeal. See Dhatt v. Beer, 2020 ONSC 2729; aff’d 2020 ONCA 545.