Can I Get My Deposit Back After a Failed Closing?

You signed the Agreement of Purchase and Sale.

You paid a substantial deposit.

Then financing became difficult, the transaction collapsed, and the builder said your deposit was forfeited.

Can I Get My Deposit Back After a Failed Closing?

Can I get my deposit back if I failed to close?

The answer depends on the contract, the evidence, the seller's loss, and whether the result would be fair in the circumstances.

The Ontario Court of Appeal decision in Naeem v. Bowmanville Lakebreeze West Village Ltd., 2024 ONCA 383, is an important reminder that a failed closing does not always end the legal analysis. A buyer may still have legal options in a deposit dispute Ontario case, including a possible claim for relief from forfeiture.

The Builder Wanted To Keep The Deposit

In Naeem, the buyer entered into an Agreement of Purchase and Sale for a new property and paid a significant deposit. The builder delayed completion and moved closing dates. When the deal failed to close, the builder terminated the agreement and claimed the deposit was forfeited.

For an Ontario homebuyer, losing a deposit can be financially devastating. But in a builder dispute Ontario courts may look beyond the simple fact that closing did not happen.

What Is Relief From Forfeiture?

Relief from forfeiture is an equitable remedy. In plain English, it allows a court to prevent a harsh or unfair loss in certain circumstances.

It is not automatic. It is not a free pass for a buyer who fails to close. It is discretionary and depends on the facts. Many buyers still lose deposits after a failed real estate closing. But if the deposit is very large, the seller's loss is small or unproven, and the surrounding circumstances support intervention, a court may consider returning some or all of the deposit.

The Legal Test Ontario Courts Use

Ontario courts often consider whether the deposit is disproportionate to the seller's actual damages and whether it would be unconscionable for the seller to keep the deposit.

In practical terms, the court may ask: Did the seller actually lose money? Is the deposit much larger than that loss? Did either side act unfairly? Would keeping the deposit create an unfair windfall? These questions matter in a relief from forfeiture Ontario analysis.

Why The Buyer Won In Naeem

The buyer did not win simply because the closing failed. The court considered the builder's conduct, the buyer's circumstances, and the absence of demonstrated loss to the builder.

The builder had repeatedly changed timelines. The purchaser had not been properly informed of important rights. The court also considered whether the builder had actually suffered a loss. Those factors supported relief from forfeiture.

Does This Mean Every Buyer Gets Their Deposit Back?

No. A buyer default Ontario case can still result in the buyer losing the deposit and, in some situations, facing a claim for additional damages. Courts take real estate contracts seriously.

The point is that builder keeping deposit disputes are fact-specific. The Agreement of Purchase and Sale, closing notices, financing history, negotiations, seller conduct, buyer conduct, and actual damages all need to be reviewed before a buyer assumes there are no options.

What Documents Will Your Lawyer Need?

Before contacting a real estate lawyer Ontario buyers should gather the Agreement of Purchase and Sale, amendments, deposit receipts, mortgage approvals, mortgage refusals, financing correspondence, builder emails, closing notices, default notices, demand letters, realtor communications, bank records, text messages, and resale information if available.

Common Mistakes That Cost Buyers Thousands

Common mistakes include assuming the deposit is automatically gone, ignoring builder letters, deleting financing records, waiting too long, failing to preserve evidence, and trying to handle the dispute without legal advice.

What Courts Actually Look At

Ontario courts may consider the size of the deposit, the seller's actual losses, the buyer's conduct, the seller's conduct, bargaining power, negotiations, fairness, unconscionability, and the wording of the Agreement of Purchase and Sale.

Facing a Builder Dispute?

If a builder is claiming your deposit is forfeited, do not assume the matter is over. A careful review of the Agreement of Purchase and Sale, builder correspondence, financing records, and surrounding circumstances may identify options that are not immediately obvious.

Book a consultation with Bhardwaj Law Professional Corporation to discuss your situation before assuming your deposit is lost.

Final Takeaway - Can I get my deposit back after a failed closing?

The fact that a buyer failed to close does not automatically end the legal analysis. Ontario courts may intervene where fairness and equity require it. Every case is different, but buyers facing the loss of a substantial deposit should obtain legal advice before assuming they have no options available.

This article is for general information only and is not legal advice. Legal advice depends on the specific contract, correspondence, notices, evidence, and circumstances of each case.

Speak to a Real Estate Lawyer Before You Give Up Your Deposit

If a builder is refusing to return your deposit after a failed closing, do not assume you have no options. These cases depend on the Agreement of Purchase and Sale, the builder’s conduct, financing history, notices, and the actual loss suffered.

Bhardwaj Law Professional Corporation can review your documents and help you understand whether relief from forfeiture or another legal remedy may be available.

Book a consultation today or call 416-747-7777 to discuss your options before taking your next step.

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Real estate disputes affect thousands of Ontario buyers every year, especially in a changing market.

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If you're currently dealing with a builder dispute, failed closing, or deposit issue, contact Bhardwaj Law Professional Corporation at 416-747-7777 to discuss your situation.

If a builder claimed your deposit was forfeited, what would you do first?

• Assume it's gone
• Call a lawyer - (416) 747 - 7777
• Negotiate with the builder
• Research my options online