By Mark Weisleder

A major issue arising in bidding wars is when a buyer regrets their purchase decision almost immediately afterwards. Or worse, when their lender appraisal says that they paid too much and will not lend the buyer enough to close the deal. Here are five lessons to learn about the consequences of a buyer’s remorse in these situations.



1. Can the buyer simply refuse to pay the deposit, if it has not yet been paid?

In many bidding wars, this is not possible, as sellers are demanding certified cheques or bank drafts to accompany any offer. However, even if a buyer can either stop payment on an uncertified cheque or refuse to pay the deposit, they are still liable for damages. They can be sued by a seller for the difference in price if the seller subsequently sells for less money. In addition, even if the seller subsequently sells for more money, the buyer can be sued for the amount of the deposit that they failed to deliver.

2. Should a buyer agent approach the listing agent for a mutual release immediately?

Be very careful about this. If a buyer agent communicates that the buyer cannot close, then the seller could take the legal position and declare that the buyer has committed an anticipatory breach of contract. This would permit the seller to treat the contract as terminated by breach, and proceed to sue the buyer for the items listed above. It is best for these negotiations to be carried out by lawyers, to make sure that the parties’ legal position is protected at all times, if a settlement is being negotiated.

3. Is there a legal solution to this?

If there is sufficient time before closing, a buyer is permitted to assign their contract to a new buyer, who could take over their position and close with the seller. This is because unlike a contract with a builder, there is nothing preventing a buyer from assigning a re-sale agreement before closing. A buyer must understand that if they are asking their own agent to “sell” the property for them, they will have to pay real estate commission as well. Therefore, a buyer would have to assign their agreement for a price that is equal to the price they paid plus commission, just to break even.

4. Does a seller have to agree to this assignment?

In most cases the answer is no, unless the original offer contained a seller take-back mortgage. However, in practice, many lenders will not recognize the new buyer unless there is an amendment done to the original agreement to change the buyer name to the new buyer. This will require the consent of the seller.

In my opinion, this is unfortunate as lawyers routinely change how a buyer can take title by providing a direction to this effect on closing. Sellers should consent to this anyway, as long as the original buyer remains liable if the new buyer cannot close the agreement for any reason.

5. Can the buyer list the assignment onto the MLS system?

Theoretically, a buyer could list the property on an MLS system because they have a right in the contract that they can sell. However, most real estate board rules require that to list a property on their system, you must be able to show the property and without the seller’s agreement, this will not be possible.

I had a situation where the buyer could not close after winning a bidding war. I negotiated with the seller’s lawyer to permit the buyer to put the property back onto the MLS system and the seller would permit showings. It was also agreed that the buyer could not make any profit on this re-sale and that they could only recover their extra commission cost. The benefit to the seller was that their deal closed and the parties were able to save themselves from very expensive legal proceedings.

Anyone can close a simple real estate deal. When it comes to choosing or recommending a real estate lawyer, make sure you have one that can solve problems that can arise as well.

  • Brian Martindale

    Mark’s last line — “Anyone can close a simple real estate deal. When it comes to choosing or recommending a real estate lawyer, make sure you have one that can solve problems that can arise as well.” — applies equally as well (maybe even more so) to real estate registrants.

  • 604homesguy

    I am guessing this is aimed at Ontario, but here in BC the right to assign a re-sale contract has been removed in our re-sale contracts. If a buyer wants to have the ability to assign you have to cross out that section and have the seller sign a separate disclosure.

  • agentblair

    BC standard contracts address assignment, restricted without seller permission, and profit to the seller. If clauses being stuck out, then additional disclosures required. A lot of nonsense put it place by BC government in 2016.

  • Najib Shams

    good to know.

  • Doug Best

    sueing is expensive…unless were talking hundreds of thousands it doesnt make sense for the seller to sue the buyer in these situations. Just move on and find another buyer. Our buyer contracts in Alberta aren’t worth the paper they are written on as it costs more to to pay a lawyer to “TRY” to collect when the buyer breaches the contract than the commission payable and no one is going to pay retainers.

  • Basie

    As always, clear, concise, and very informative article. Thank you Mark.

  • Rita Giglione

    Great article, thank you.