Online ClosingsFixed Closing Cost $999*

Time Really Is of the Essence

Agreement allowed to be cancelled because deposit paid late.

As you may be aware, the Standard OREA Agreement of Purchase and Sale for a resale House or Condominium reads: “Time shall in all respects be of the essence hereof provided that the time for closing or completing any matter provided for herein may be extended or abridged by an agreement in writing…”

The clause makes it clear that time is essential in “all” respects and that this can only be amended “in writing”. A recent case, upheld by the Court of Appeal of Ontario, reminds us of how important this clause and timing are in Real Estate Agreements. In this case, the buyer inadvertently paid the deposit 7 days late. In the meantime, after the day on which the deposit was due, the seller had an opportunity to sell the property to someone else and did so. The court upheld the seller’s right to cancel the original agreement because the deposit was delivered late and sell the property to the new buyer. The court also held that the seller was not required to tell the buyer that it intended to cancel the agreement as soon as the date for paying the deposit passed and noted that the agreement was negotiated by a professional agent. Essentially, the court affirmed the notion that where parties enter into agreements which specifically state that “time is of the essence”, as is found in the standard OREA agreement, they will be held to that standard for timing. Although this recent case involved a commercial transaction, it may be relied on as authority for allowing parties to cancel a transaction when something is not done on time, whether intentionally or not and without an obligation to immediately advise the other party of the intent to cancel. This may also possibly be relied on and extended as general authority for all time related aspects of a transaction. Dates for satisfying conditions, providing waivers, conducting inspections, completing Status Certificate reviews, providing further deposits, and, of course, closing may all take on greater importance . So, to be safe and avoid the risk of allowing an agreement to be cancelled or be subject to other consequences, always pay close attention to and meet all the time limits in an Agreement. If you cannot, have them extended in writing.