When a Real Estate Deal Becomes a Breach of Contract Case

Not every real estate deal ends with keys exchanged and smiles shared. Some transactions—particularly in a turbulent market—break down entirely. When that happens, what begins as a standard Agreement of Purchase and Sale can quickly turn into a full legal dispute. In both resale and pre-construction deals, a failed closing is more than a lost opportunity. It's a potential breach of contract. And when large deposits, tight timelines, or market shifts are involved, even a small misstep can trigger costly consequences.

What Counts as a Breach in a Real Estate Deal?

The Agreement of Purchase and Sale (APS) is a binding contract. When one party fails to meet its obligations, the other may have legal grounds to claim breach. Common examples include:

• A buyer walking away without valid conditions
• A seller refusing to close or deliver vacant possession
• Failure to secure financing after waiving the financing condition
• Material misrepresentations about the property
• Missing key deadlines like the title requisition or closing

Not every failure is automatically a breach, but when obligations aren’t met and no contractual excuse exists, the dispute may be litigated.

What Happens After a Deal Fails?

In most cases, the fallout centres around the deposit. Who keeps it? Can the buyer get it back? Was there a genuine attempt to mitigate losses? These questions often form the basis of legal claims. Buyers might sue for return of deposit plus damages (like appraisal or legal fees). Sellers may sue for losses due to reselling at a lower price. In more serious cases, parties seek specific performance, asking the court to force the deal through. When real estate values are volatile, these cases can become complex quickly, especially when damages are hard to calculate or the market shifts between the failed closing and resale.

Why It’s Becoming More Common

With rising interest rates, tightened financing, and increasing construction delays, more buyers are backing out. Sellers, meanwhile, are less willing to accept late closings or price renegotiations. At the heart of these disputes is a simple legal truth: real estate agreements are enforceable contracts. Courts don’t treat them lightly. Buyers and sellers alike should understand that breaching the APS carries real legal and financial risk.

Final Thought

What looks like a real estate deal gone wrong is, in legal terms, often a breach of contract case. Whether pre-construction or resale, once a deal falls apart, the legal issues begin. Parties who understand their rights—and their exposure—are in the best position to respond effectively.